VF Reports Third Quarter 2013 Results, Increases Dividend By 21 Percent And Announces Four-for-One Stock Split

VF Corporation (NYSE:VFC) today reported financial results for its third quarter ended Sept. 28, 2013. All per share amounts are presented on a diluted basis. “Adjusted” amounts refer to non-GAAP measures as described in the “Adjusted Amounts” paragraph at the end of this news release.

“VF is at its best when we empower our brands to deliver innovative products, connect with consumers, and operate with efficiency and discipline,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “Our third quarter results validate our growth strategy and our ability to deliver strong results in a challenging economic environment.”

“Our solid year-to-date results allow us to make significant, incremental brand investments while still delivering on our long-term earnings growth target,” continued Wiseman. “The announced 21 percent increase in our dividend and stock split demonstrate the confidence we have in our ability to consistently generate strong returns for VF shareholders.”

Third Quarter 2013 Review

Revenues rose 5 percent to $3.3 billion, compared with the same period of 2012, led by Outdoor & Action Sports, Jeanswear, and our International and Direct-to-Consumer businesses. Changes in foreign currency exchange rates positively impacted total reported revenue growth by approximately one percentage point during the quarter.

Gross margin improved 90 basis points to 47.6 percent, compared with 46.7 percent in the same period of 2012. With improvements in nearly every coalition, the higher gross margin reflects the continuing shift in our revenue mix toward higher margin businesses and moderately lower year-over-year product costs.

SG&A as a percent of revenues rose 40 basis points to 30 percent in the third quarter. This increase includes an 80 basis point impact from higher marketing investments to support our largest and fastest growing businesses.

Operating income on an adjusted basis grew 6 percent to $582 million in the third quarter, compared with $551 million in the same period of 2012. On a GAAP basis, third quarter operating income increased 8 percent to $580 million, compared with $537 million in last year’s same period. Adjusted operating margin was 17.7 percent, compared with 17.5 percent in the third quarter of 2012. On a GAAP basis, operating margin rose to 17.6 percent from 17.1 percent in last year’s period.

Net income on an adjusted basis grew 11 percent to $436 million in the third quarter, compared with $393 million in the same period of 2012. Adjusted earnings per share – which excludes items related to the acquisition of The Timberland Company (“Timberland”) of $0.02 per share in the third quarter – increased 11 percent to $3.91 per share from $3.52 per share during the same period last year. Last year’s third quarter adjusted earnings per share of $3.52 excluded $0.10 per share in Timberland acquisition-related expenses. On a GAAP basis, third quarter net income was up 14 percent to $434 million or $3.89 per share.

Coalition Review

Revenues for Outdoor & Action Sports increased 6 percent in the quarter to $2 billion with balanced growth across the U.S. and international markets as well as its wholesale and direct-to-consumer channels. The revenue impact of shipments that moved from September into October due to a retailer calendar shift that was discussed during the company’s second quarter earnings call negatively impacted third quarter coalition revenue growth by about 2 percentage points.

Consistent with expectations, revenues for The North Face ® brand rose 3 percent globally. Third quarter results were driven by more than 25 percent growth in Direct-to-Consumer sales and flat revenues in the brand’s wholesale business due to the retailer calendar shift and later-in-the-year shipments resulting from retailer caution. When normalized for the retailer calendar shift, The North Face ® brand’s global revenues would have been up at a high single-digit rate. By region, The North Face ® brand’s revenues were up at a low single-digit percentage rate in the Americas (impacted by the calendar shift) and a low double-digit percentage rate in Asia Pacific, offset by a low single-digit percentage rate decrease in Europe.

The Vans ® brand continued its strong performance on all fronts: wholesale, direct-to-consumer and in all regions of the world. Third quarter Vans ® brand global revenues were up 16 percent driven by a low-teen percentage growth rate in the Americas, with 25 percent growth in Europe and a high single-digit growth rate in its Asia Pacific business. Globally, the Vans ® brand posted strong mid-teen percentage revenue increases in both its wholesale and direct-to-consumer channels.

Third quarter revenues for the Timberland ® brand were up 2 percent. In the Americas region, revenues increased at a mid single-digit percentage rate driven by balanced direct-to-consumer and wholesale growth rates. In Asia Pacific, third quarter revenues increased at a low single-digit percentage rate, up at a high single-digit rate on a constant-dollar basis. And, consistent with expectations, conditions in Europe remain challenging with Timberland ® brand revenues up modestly, down at a mid single-digit percentage rate on a constant currency basis. Globally, the Timberland ® brand’s growth was balanced between its direct-to-consumer and wholesale businesses.

Third quarter operating income for Outdoor & Action Sports rose 2 percent to $421 million and operating margin decreased 90 basis points to 21.4 percent, compared with 22.3 percent in the 2012 period. This result was negatively impacted by the retailer shift in revenues from the third to fourth quarter and incremental marketing investments to position the coalition’s three largest brands – The North Face ® , Vans ® and Timberland ® – for greater growth in 2014.

Jeanswear third quarter revenues were up 4 percent to $747 million, driven by a mid single-digit percent increase in the Americas region, which included a high single-digit increase in its Mass business. European revenues were up at a low double-digit rate and in the Asia Pacific region, revenues declined at a high single-digit rate as the Lee ® brand continues to work through an industry-wide build-up in inventories in China that began during the latter part of 2012.

Global revenues for the Wrangler ® brand were up 8 percent driven by strength in the Americas region, with strong results in its Mass channel and continued strength in its Western specialty and Latin American businesses. Wrangler ® brand revenues in Europe were up 10 percent on a constant dollar basis. Third quarter revenues for the Lee ® brand were up 3 percent globally driven by a mid single-digit percentage increase in the Americas region reflecting balanced results across all channels. Third quarter revenues for the Lee ® brand in Europe were up at a high single-digit rate with particular strength in Northern Europe, and as previously noted, the Lee ® brand’s sales in Asia Pacific were lower.

Strong international performance along with moderating product costs led to a 20 percent increase in Jeanswear operating income to $158 million. Operating margin reached 21.2 percent in the quarter with improvements in the Wrangler ® and Lee ® brands across every region of the world including a significant contribution from the very strong performance in Europe.

Imagewear revenues were flat in the third quarter at $284 million. Despite the absence of growth, operating income for the coalition was up 9 percent to $41 million with a 110 basis point improvement in operating margin to 14.3 percent, reflecting gross margin expansion. Imagewear revenues are expected to increase at a low double-digit rate in the fourth quarter.

In line with expectations, Sportswear revenues grew 1 percent to $155 million in the quarter, driven by more than 25 percent growth in direct-to-consumer sales offset by a mid-teen rate decline in its wholesale business. The retailer calendar shift also affected Sportswear’s wholesale results. When normalized for this shift, global revenues in the third quarter for the coalition would have been up at a high single-digit rate. Nautica ® brand revenues were down at a mid single-digit rate due to the calendar shift. The Kipling ® brand’s U.S. business achieved a 39 percent increase in revenues over the same period last year. Globally, the Kipling ® brand grew 22 percent. The coalition posted strong gross margin expansion and a significant improvement in profitability with a 30 percent increase in operating income to $24 million, representing a 350 basis point improvement in operating margin to 15.5 percent.

In a challenging business environment, third quarter revenues for the Contemporary Brands coalition were up 1 percent to $105 million. Better revenue comparisons are expected in the fourth quarter. Contemporary Brands’ operating income fell 30 percent to $9 million in the third quarter. Operating margin fell 390 basis points to 9.0 percent.

International Review

International revenues in the third quarter increased 7 percent, up 4 percent on a constant currency basis. Americas (non-U.S.) revenues increased 13 percent (up 17 in percent constant currency) with strong performances from the Vans ®, JanSport ® and Reef ® brands. Revenues in Europe rose 7 percent (up 2 percent in constant currency) with positive results by the Vans ®, Wrangler ®, 7 For All Mankind ®, Eastpak ® , Lee ®, Kipling ®, Napapijri ® , and SmartWool ® brands. In Asia Pacific, revenues were up 2 percent (up 3 percent in constant currency) driven by 10 percent growth in China which included strong results by the Vans ®, The North Face ®, and Timberland ® brands offset by continued weakness from the Lee ® brand as previously discussed. The North Face ® and Vans ® brands saw strong increases in international Direct-to-Consumer revenue in the quarter, up 19 percent and 44 percent, respectively. International revenues were 40 percent of total VF revenues in the third quarter; consistent with the level reached in the same period of 2012.

Direct-to-Consumer Review

Direct-to-Consumer revenues increased 14 percent in the third quarter including a 28 percent increase in The North Face ® brand, an 18 percent increase in the Vans ® brand, a 16 percent increase in the Nautica ® brand and a 50 percent increase in the Kipling ® brand. A total of 55 stores were opened across our brands in the quarter bringing the total number of owned retail stores to 1,202. Direct-to-Consumer revenues reached 19 percent of total revenues in the third quarter compared with 18 percent in the 2012 period.

Balance Sheet Review

Inventories were flat compared with Sept. 2012 levels despite higher revenues reflecting VF’s continued focus on operational excellence. Additionally, the company paid off $400 million in debt associated with the Timberland acquisition. For the full year, VF’s cash generation from operations is expected to exceed $1.4 billion.

2013 Guidance

Revenues are still expected to approximate $11.5 billion in 2013. Full-year gross margin is now expected to approach 48 percent, up approximately 150 basis points over 2012’s results. As predicted during our second quarter call, VF’s very strong earnings performance is allowing us to make significant, incremental marketing investments to support long-term growth for our top brands. These incremental investments total $40 million, or about $0.25 in earnings per share, with $10 million recognized in the third quarter and $30 million expected to be recognized in the fourth quarter. Even with these incremental investments, full year adjusted earnings per share guidance remains at $10.85 (or $10.78 on a GAAP basis), which represents a 13 percent increase (or 11 percent increase on a GAAP basis) over 2012’s results and is directly in line with the company’s stated long-term financial objectives.

Adjusted Amounts

This release refers to adjusted amounts that exclude restructuring and other items related to the acquisition of The Timberland Company, which approximated $3 million ($0.02 per share) in the third quarter of 2013, compared with $14 million ($0.10 per share) in the third quarter of 2012. Adjusted amounts for the full year 2013 exclude Timberland acquisition-related expenses of $10 million ($0.07 per share), compared with $31 million ($0.25 per share) for the full year 2012. Reconciliations of certain GAAP measures to adjusted amounts are presented in the supplemental financial information included with this release, which identify and quantify all excluded items.

Four-for-One Stock Split and Increase in Dividend Approved

In a separate news release issued today, VF Corporation announced that its Board of Directors approved a four-for-one split of the company’s shares of common stock to be payable in the form of a stock dividend. Shareholders of record as of the close of business on Dec. 10, 2013 will receive three additional shares of common stock for each share of common stock they own, payable on Dec. 20, 2013. The New York Stock Exchange is expected to begin reporting the adjusted number of shares outstanding and adjusted per-share stock price on Dec. 23, 2013.

Additionally, on a pre-split basis, VF’s Board of Directors declared a quarterly dividend of $1.05 per share, reflecting an $0.18 or 21 percent increase over the previous quarter’s dividend. This marks VF’s 41 st consecutive year of higher dividend payments to shareholders. This dividend will be payable on Dec. 20, 2013 to shareholders of record at the close of business on Dec. 10, 2013. For more information, please visit the investor relations page at www.vfc.com.

Webcast Information

VF will hold its third quarter conference call and webcast today at 8:30 a.m. Eastern Time. Interested parties should call 888-811-5445 (domestic) or 913-643-4201 (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 Oct. 21 through Oct. 28, 2013, via telephone at 877-870-5176 (access code: 1673907) 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 five largest brands are The North Face ®, Vans ® , Wrangler ®, Timberland ®, 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,” “could,” 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 CORPORATIONConsolidated Statements of Income(Unaudited)(In thousands, except per share amounts)
 
      Three Months Ended September     Nine Months Ended September
2013     2012 2013     2012
 
Net sales $ 3,266,681 $ 3,119,614 $ 8,043,638 $ 7,762,660
Royalty income   30,588     28,740     85,911     83,935  
 
Total revenues   3,297,269     3,148,354     8,129,549     7,846,595  
 
Costs and operating expenses
Cost of goods sold 1,728,144 1,678,090 4,226,779 4,222,368
Selling, general and administrative expenses   989,422     933,372     2,764,005     2,609,248  
  2,717,566     2,611,462     6,990,784     6,831,616  
 
Operating income 579,703 536,892 1,138,765 1,014,979
 
Interest income 1,259 632 2,564 2,858
Interest expense (21,246 ) (23,841 ) (63,788 ) (70,779 )
Other income (expense), net   (1,250 )   1,569     (1,723 )   44,872  
 
Income before income taxes 558,466 515,252 1,075,818 991,930
 
Income taxes   124,705     133,934     233,366     239,960  
 
Net income 433,761 381,318 842,452 751,970
 
Net (income) loss attributable to noncontrolling interests   -     -     -     (139 )
 
Net income attributable to VF Corporation $ 433,761   $ 381,318   $ 842,452   $ 751,831  
 
Earnings per common share attributable to

VF Corporation common stockholders
Basic $ 3.96 $ 3.48 $ 7.68 $ 6.85
Diluted 3.89 3.42 7.55 6.72
 
Weighted average shares outstanding
Basic 109,545 109,557 109,629 109,800
Diluted 111,405 111,488 111,620 111,849
 
Cash dividends per common share $ 0.87 $ 0.72 $ 2.61 $ 2.16
 
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 third quarter ends on the Saturday closest to September 30. For presentation purposes herein, all references to periods ended September 2013, December 2012 and September 2012 relate to the 13 week, 52 week and 13 week fiscal periods ended September 28, 2013, December 29, 2012 and September 29, 2012, respectively.
 

 

VF CORPORATIONConsolidated Balance Sheets(Unaudited)(In thousands, except share amounts)
 
      September     December     September
2013 2012 2012
 
ASSETS
Current assets
Cash and equivalents $ 315,661 $ 597,461 $ 304,603
Accounts receivable, net 1,663,118 1,222,345 1,612,579
Inventories 1,752,284 1,354,158 1,758,686
Other current assets   362,841     275,619     322,932  
Total current assets 4,093,904 3,449,583 3,998,800
 
Property, plant and equipment 904,809 828,218 775,476
Intangible assets 2,939,371 2,917,058 2,922,233
Goodwill 2,014,717 2,009,757 2,003,855
Other assets   499,260     428,405     431,368  
Total assets $ 10,452,061   $ 9,633,021   $ 10,131,732  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 468,310 $ 12,559 $ 741,008
Current portion of long-term debt 2,987 402,873 402,838
Accounts payable 659,135 562,638 535,367
Accrued liabilities   924,228     754,142     756,629  
Total current liabilities 2,054,660 1,732,212 2,435,842
 
Long-term debt 1,427,138 1,429,166 1,429,824
Other liabilities 1,341,386 1,346,018 1,339,282
Commitments and contingencies
Stockholders' equity
Preferred Stock, par value $1 - - -
Common Stock, stated value $1 109,805 110,205 109,937
Additional paid-in capital 2,702,110 2,527,868 2,497,795
Accumulated other comprehensive income (loss) (365,970 ) (453,895 ) (386,853 )
Retained earnings   3,182,932     2,941,447     2,705,905  
Total stockholders' equity   5,628,877     5,125,625     4,926,784  
Total liabilities and stockholders' equity $ 10,452,061   $ 9,633,021   $ 10,131,732  
 

 

VF CORPORATIONConsolidated Statements of Cash Flows(Unaudited)(In thousands)
 
      Nine Months Ended September
2013     2012
 
Operating activities
Net income $ 842,452 $ 751,970
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 112,989 104,628
Amortization of intangible assets 34,450 36,130
Other amortization 33,670 26,025
Stock-based compensation 70,258 73,149
Provision for doubtful accounts 14,747 15,521
Pension expense in excess of (less than) contributions (45,669 ) 57,674
Gain on sale of business - (42,000 )
Other, net 65,740 188
Changes in operating assets and liabilities, net of
sale of business:
Accounts receivable (455,712 ) (502,501 )
Inventories (399,396 ) (317,761 )
Other current assets (44,488 ) (23,854 )
Accounts payable 96,246 (100,101 )
Accrued compensation 9,816 (20,153 )
Accrued income taxes (61,003 ) (17,095 )
Accrued liabilities 133,646 42,078
Other assets and liabilities   10,330     18,707  

Cash provided by operating activities
418,076 102,605
 
Investing activities
Capital expenditures (203,469 ) (190,277 )
Business acquisitions, net of cash acquired - (1,750 )
Proceeds from sale of business - 68,519
Software purchases (41,923 ) (12,509 )
Other, net   (9,896 )   (3,429 )
Cash used by investing activities (255,288 ) (139,446 )
 
Financing activities
Net increase in short-term borrowings 457,856 459,173
Payments on long-term debt (402,141 ) (2,079 )
Purchase of Common Stock (283,433 ) (306,422 )
Cash dividends paid (286,790 ) (237,520 )
Proceeds from issuance of Common Stock, net 30,902 45,668
Tax benefits of stock option exercises   41,946     39,455  
Cash used by financing activities (441,660 ) (1,725 )
 
 
Effect of foreign currency rate changes on cash and equivalents   (2,928 )   1,941  
 
Net change in cash and equivalents (281,800 ) (36,625 )
 
Cash and equivalents - beginning of year   597,461     341,228  
 
Cash and equivalents - end of period $ 315,661   $ 304,603  
 

   

VF CORPORATIONSupplemental Financial InformationBusiness Segment Information(Unaudited)(In thousands)
 
      Three Months Ended September Nine Months Ended September
2013     2012 2013     2012
 
Coalition revenues
Outdoor & Action Sports $ 1,971,963 $ 1,852,267 $ 4,459,845 $ 4,156,208
Jeanswear 747,241 718,812 2,076,919 2,054,529
Imagewear 284,480 284,526 779,064 813,540
Sportswear 155,208 154,190 416,919 394,593
Contemporary Brands 104,998 104,165 307,339 339,016
Other   33,379     34,394     89,463     88,709  
 
Total coalition revenues $ 3,297,269   $ 3,148,354   $ 8,129,549   $ 7,846,595  
 
 
Coalition profit
Outdoor & Action Sports $ 421,177 $ 413,012 $ 748,137 $ 697,181
Jeanswear 158,334 131,447 410,551 335,566
Imagewear 40,698 37,463 107,343 110,753
Sportswear 23,987 18,499 52,481 40,711
Contemporary Brands 9,456 13,436 29,910 40,286
Other   (47 )   1,377     (2,195 )   133  
 
Total coalition profit 653,605 615,234 1,346,227 1,224,630
 
Corporate and other expenses (75,152 ) (76,773 ) (209,185 ) (164,779 )
Interest, net   (19,987 )   (23,209 )   (61,224 )   (67,921 )
 
Income before income taxes $ 558,466   $ 515,252   $ 1,075,818   $ 991,930  
 

 

VF CORPORATIONSupplemental Financial InformationBusiness Segment Information – Constant Currency Basis(Unaudited)(In thousands)

 
 
      Three Months Ended September 2013
    Exclude    
As Reported Impact of Foreign Constant
under GAAP Currency Exchange Currency
 
Coalition revenues
Outdoor & Action Sports $ 1,971,963 $ 31,963 $ 1,940,000
Jeanswear 747,241 (695 ) 747,936
Imagewear 284,480 (571 ) 285,051
Sportswear 155,208 - 155,208
Contemporary Brands 104,998 1,341 103,657
Other   33,379     -     33,379  
 
Total coalition revenues $ 3,297,269   $ 32,038   $ 3,265,231  
 
Coalition profit
Outdoor & Action Sports $ 421,177 $ 9,890 $ 411,287
Jeanswear 158,334 1,376 156,958
Imagewear 40,698 (4 ) 40,702
Sportswear 23,987 - 23,987
Contemporary Brands 9,456 213 9,243
Other   (47 )   -     (47 )
 
Total coalition profit 653,605 11,475 642,130
 
Corporate and other expenses (75,152 ) - (75,152 )
Interest, net   (19,987 )   -     (19,987 )
 
Income before income taxes $ 558,466   $ 11,475   $ 546,991  
 
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 business performed excluding the effects of changes in foreign currency translation
rates. Management believes this information is useful to investors to facilitate comparison 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 CORPORATIONSupplemental Financial InformationBusiness Segment Information – Constant Currency Basis(Unaudited)(In thousands)
 
      Nine Months Ended September 2013
    Exclude    
As Reported Impact of Foreign Constant
under GAAP Currency Exchange Currency
 
Coalition revenues
Outdoor & Action Sports $ 4,459,845 $ 36,443 $ 4,423,402
Jeanswear 2,076,919 (3,481 ) 2,080,400
Imagewear 779,064 (1,333 ) 780,397
Sportswear 416,919 - 416,919
Contemporary Brands 307,339 1,915 305,424
Other   89,463     -     89,463  
 
Total coalition revenues $ 8,129,549   $ 33,544   $ 8,096,005  
 
Coalition profit
Outdoor & Action Sports $ 748,137 $ 12,539 $ 735,598
Jeanswear 410,551 1,850 408,701
Imagewear 107,343 44 107,299
Sportswear 52,481 - 52,481
Contemporary Brands 29,910 328 29,582
Other   (2,195 )   -     (2,195 )
 
Total coalition profit 1,346,227 14,761 1,331,466
 
Corporate and other expenses (209,185 ) - (209,185 )
Interest, net   (61,224 )   -     (61,224 )
 
Income before income taxes $ 1,075,818   $ 14,761   $ 1,061,057  
 
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 business performed excluding the effects of changes in foreign currency translation
rates. Management believes this information is useful to investors to facilitate comparison 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 CORPORATIONSupplemental Financial InformationReconciliation of Select GAAP Measures to Non-GAAP Measures(Unaudited)(In thousands)
 
      Three Months         Three Months    
Ended Operating Ended Operating
September 2013 Margin September 2012 Margin
 
Operating income, as reported under GAAP $ 579,703 17.6% $ 536,892 17.1%
Timberland acquisition-related expenses   2,759   14,358
 
Operating income, as adjusted $ 582,462 17.7% $ 551,250 17.5%
 
 
Net income attributable to VF Corporation,
as reported under GAAP $ 433,761 $ 381,318
Timberland acquisition-related expenses   2,205   11,324
 
Net income attributable to VF Corporation,
as adjusted $ 435,966 $ 392,642
 
 
Diluted earnings per share, as reported
under GAAP $ 3.89 $ 3.42
Timberland acquisition-related expenses   0.02   0.10
 
Diluted earnings per share, as adjusted $ 3.91 $ 3.52
 
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. 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 CORPORATIONSupplemental Financial InformationReconciliation of Select GAAP Measures to Non-GAAP Measures(Unaudited)(In thousands)
 
      Nine Months         Nine Months    
Ended Operating Ended Operating
September 2013 Margin September 2012 Margin
 
Operating income, as reported under GAAP $ 1,138,765 14.0% $ 1,014,979 12.9%
Timberland acquisition-related expenses   10,037   23,954  
 
Operating income, as adjusted $ 1,148,802 14.1% $ 1,038,933   13.2%
 
 
Net income attributable to VF Corporation,
as reported under GAAP $ 842,452 $ 751,831
Timberland acquisition-related expenses 8,256 18,049
Gain on sale of John Varvatos Enterprises, Inc.   -   (35,975 )
 
Net income attributable to VF Corporation,
as adjusted $ 850,708 $ 733,905  
 
Guidance
Nine Months Nine Months Year
Ended Ended Ended
September 2013 September 2012 December 2013
Diluted earnings per share, as reported
under GAAP $ 7.55 $ 6.72 $ 10.78
Timberland acquisition-related expenses 0.07 0.16 0.07
Gain on sale of John Varvatos Enterprises, Inc.   -   (0.32 )   -  
 
Diluted earnings per share, as adjusted $ 7.62 $ 6.56   $ 10.85  
 

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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