VF Corporation (NYSE: VFC) today reported financial results for
its second quarter ended June 29, 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 release.
“Our strong second quarter results demonstrate that VF’s diverse
portfolio of brands supported by powerful platforms is a potent
engine for growth,” said Eric Wiseman, VF Chairman and Chief
Executive Officer. “By staying sharply focused on our strategies –
leading in innovation, expanding geographically and connecting more
deeply with our consumers – we are winning in the global
marketplace and are on track to deliver another record year for
VF.”
Second Quarter 2013 Review
Revenues rose 4 percent to $2.2 billion compared with the
same period of 2012, driven by strength in Outdoor & Action
Sports, international and direct-to-consumer businesses.
Gross margin improved 240 basis points to 48.5 percent,
an all-time high for any quarter in VF’s history. This performance,
which includes improvements in nearly every coalition, compares
with 46.1 percent in the same period of 2012. The higher gross
margin reflects lower year-over-year product costs and the
continued shift in our revenue mix toward higher margin
businesses.
Operating income on an adjusted basis grew 22 percent to
$206 million in the second quarter, compared with $169 million in
the same period of 2012. On a GAAP basis, second quarter operating
income increased 23 percent to $201 million, compared with $164
million in last year’s same period. Adjusted operating
margin was 9.3 percent, compared with 7.9 percent in the second
quarter of 2012. On a GAAP basis, operating margin rose to 9.1
percent from 7.7 percent in last year’s period.
Net income on an adjusted basis grew by 16 percent to
$142 million from $123 million in the second quarter of 2012.
Adjusted earnings per share – which excludes Timberland
acquisition-related items of $0.03 per share in the second quarter
– increased 14 percent to $1.27 per share from $1.11 per share
during the same period last year. Last year’s second quarter
adjusted earnings per share of $1.11 excluded a $0.32 per share
gain from the sale of John Varvatos and $0.03 per share in
acquisition-related expenses. Additionally, last year’s second
quarter earnings per share included a non-recurring $0.10 per share
discrete tax benefit primarily related to the settlement of prior
years’ tax audits. On a GAAP basis, second quarter net income was
down 11 percent to $138 million or $1.24 per share.
Second Quarter Coalition Review
Outdoor & Action Sports revenues rose 6 percent in
the quarter to $1.1 billion with balanced growth across both the
U.S. and international markets, and its wholesale and
direct-to-consumer channels.
The North Face® brand revenues rose 5 percent globally driven by
a mid-teen percentage rate increase in its direct-to-consumer sales
and more than 20 percent growth in its international business.
Revenues for The North Face® brand’s Americas region were down
slightly, with a modest decline in its wholesale business that was
not fully offset by its strong direct-to-consumer business, which
grew at a mid-teen percentage growth rate. Second quarter revenues
for the brand grew by 10 percent in Europe and by more than 40
percent in Asia Pacific demonstrating that The North Face® brand’s
international strategy continues to deliver outstanding
results.
Vans®, one of VF’s fastest growing and most profitable brands,
continues to perform well on all fronts: wholesale,
direct-to-consumer and in all regions of the world. In the second
quarter, Vans® brand global revenues were up 15 percent including
low-teen percentage growth in the Americas, 20 percent growth in
its European business and more than 20 percent growth in the Asia
Pacific region. The Vans® brand posted strong mid-teen percentage
revenue increases in both its wholesale and direct-to-consumer
channels globally.
Second quarter revenues for the Timberland® brand were down 3
percent. In the Americas region, revenues increased at a low
single-digit percentage rate driven by a high single-digit increase
in direct-to-consumer sales, offset by a modest decline in its
wholesale business. In Asia Pacific, where Japan remains the
brand’s largest market, second quarter revenues increased at a low
single-digit percentage rate (low double-digit rate on a
constant-dollar basis). With continued challenging conditions in
Europe, the Timberland® brand’s revenues declined at a low
double-digit percentage. Globally, on a constant-dollar basis, the
Timberland® brand’s direct-to-consumer business was up by a mid
single-digit percentage rate in the quarter.
Second quarter Outdoor & Action Sports operating income rose
22 percent to $100 million and operating margin increased 120 basis
points to 9.1 percent, compared with 7.9 percent in the 2012
period.
For the first half of 2013, Outdoor & Action Sports revenues
grew 8 percent. For the full year, VF continues to anticipate that
coalition revenues will increase by about 10 percent, driven by
particular strength in both the Vans® and The North Face®
brands.
Jeanswear second quarter revenues were up 3 percent to
$612 million, driven by a mid single-digit percent increase in the
Americas region, which benefitted in part by the normalization of
seasonal product orders from the first quarter into the second
quarter. Jeanswear revenues for the European business were up 1
percent. In the Asia Pacific region, second quarter revenues
declined at a mid single-digit rate – a sequential improvement from
the first quarter – 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.
Revenues for the Wrangler® brand were down 1 percent with about
flat results in the Americas business, which saw continued strength
in its Western specialty, Canadian and Latin American businesses,
offset by a modest decline in its Mass business. Wrangler® brand
revenues in Europe increased slightly and sales in the Asia Pacific
region declined slightly in the quarter. The Lee® brand’s second
quarter revenues were up 10 percent globally driven by a mid-teen
percentage increase in Americas revenues where the business saw
strong results from its seasonal and core jeans business. Second
quarter revenues for the Lee® brand in Europe were up slightly and,
as previously noted, the Lee® brand’s sales in Asia Pacific were
lower.
Favorable year-over-year product costs and continued
improvements in operating efficiencies led to a 17 percent increase
in Jeanswear operating income to $109 million. Operating margin
reached 17.8 percent in the quarter with improvements in the
Wrangler® and Lee® brands across every region of the world.
For the full year, U.S. Jeanswear revenues are expected to
increase at a mid single-digit rate. On a global basis, Jeanswear
should grow at a low single-digit rate, up from its previous
expectation of modest growth.
Imagewear revenues declined 4 percent in the second
quarter to $242 million, reflecting the continued delay of a
contract renewal. Excluding this program, Imagewear achieved modest
growth in the quarter. Operating income for the coalition was up 15
percent to $35 million with a 240 basis point improvement in
operating margin to 14.5 percent, reflecting lower year-over-year
product costs.
Imagewear revenues are now expected to grow at a low
single-digit percentage rate in 2013 compared with the previously
anticipated mid single-digit growth rate.
Sportswear revenues grew 14 percent to $133 million
driven by a low double-digit percentage increase in the Nautica®
brand and nearly 30 percent growth in the Kipling® (U.S.) brand.
Globally, the Kipling® brand grew 18 percent. The 14% growth for
the coalition in the quarter benefitted from a 3 percentage point
shift in timing of shipments for the Nautica® brand from the
previous quarter. Improved profitability in the coalition’s
wholesale and direct-to-consumer businesses drove a 42 percent
increase in operating income to $16 million, representing a 240
basis point improvement in operating margin to 12.2 percent.
First half revenues for Sportswear were up 9 percent. Based on
first half results and anticipated second half strength, Sportswear
revenues are now expected to be up about 10 percent from its
previous expectation of high single-digit growth.
Second quarter revenues for the Contemporary Brands
coalition were down 9 percent in the quarter to $99 million. Four
percentage points of the decline were due to the absence of the
John Varvatos® brand, which was sold in April 2012. Contemporary
Brands’ operating income fell 34 percent to $8 million in the
second quarter. Operating margin fell 310 basis points to 8.0
percent.
Excluding the impact of the sale of the John Varvatos® brand,
full-year Contemporary Brands revenues are now expected to grow at
a low single-digit percentage rate in 2013 versus the previously
stated high single-digit growth rate.
International Review
Second quarter international revenues increased 6 percent. In
Asia Pacific, revenues were up 10 percent in the quarter, driven by
17 percent growth in China and strong results by nearly all Outdoor
& Action Sports brands. Americas (non-U.S.) revenues increased
10 percent with strong performances from the Vans®, The North
Face®, Timberland® and Wrangler® brands. Revenues in Europe rose 2
percent held back by the Timberland® brand, which continues to be
impacted by difficult economic conditions. The North Face® and
Vans® brands saw strong direct-to-consumer revenue increases in the
quarter, rising 13 percent and 44 percent, respectively.
International revenues reached 34 percent of total VF revenues in
the second quarter compared with 33 percent in the same period of
2012.
Direct-to-Consumer Review
Direct-to-consumer revenues increased 8 percent in the second
quarter including a 15 percent increase in The North Face® brand, a
16 percent increase in the Vans® brand and a 39 percent increase in
the Kipling® brand. A total of 35 stores were opened across our
brands in the quarter bringing the total number of owned retail
stores to 1,157. Direct-to-consumer revenues reached 22 percent of
total revenues in the second quarter compared with 21 percent in
the 2012 period.
Balance Sheet Review
Inventories were down $47 million, or 3 percent, from June 2012
levels reflecting VF’s consistent focus on the efficient execution
of our business. VF continues to anticipate another year of
exceptional cash generation from operations, which is expected to
exceed $1.4 billion in 2013.
2013 Earnings Per Share Guidance Raised
Revenue guidance for 2013 remains unchanged, with revenues
expected to increase by 6 percent to $11.5 billion. Given the
strong results achieved in the first half of 2013, full-year gross
margin expansion is now expected to slightly exceed the previously
anticipated 100 basis point improvement over 2012. Based on
stronger gross margin improvement, adjusted earnings per share in
2013 are now expected to increase to $10.85 per share, up $0.10
from the $10.75 per share guidance provided on April 26. On a GAAP
basis, which includes an estimated $0.07 per share in Timberland
acquisition-related expenses, earnings per share in 2013 are now
expected to rise to $10.78 per share, up $0.13 from the prior
guidance of $10.65 per share.
Adjusted Amounts
This release refers to adjusted amounts that exclude
restructuring and other items related to the acquisition of The
Timberland Company, which approximated $5 million ($0.03 per share)
in the second quarter of 2013, the same amount reported in the
second quarter of 2012. Adjusted amounts for the full year exclude
anticipated Timberland acquisition-related expenses of $9 million
($0.07 per share) in 2013, compared with $31 million ($0.25 per
share) in 2012. Additionally, adjusted amounts in the second
quarter of 2012 exclude the gain on the sale of John Varvatos
Enterprises, Inc. of approximately $42 million ($0.32 per share
inclusive of a $0.10 per share tax benefit triggered by the sale).
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.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.87
per share, payable on September 20, 2013 to shareholders of record
on September 10, 2013.
Webcast Information
VF will hold its second quarter conference call and webcast
today at 8:30 a.m. Eastern Time. Interested parties should call
888-855-5837 (domestic) or 719-325-2278 (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 July 19 through July 26, 2013, via telephone at 877-870-5176
(access code: 5989331) 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 June Six Months Ended June
2013 2012 2013 2012 Net
sales $ 2,194,727 $ 2,115,629 $ 4,776,957 $ 4,643,046
Royalty income 25,684 26,157
55,323 55,195
Total
revenues 2,220,411 2,141,786
4,832,280 4,698,241
Costs and
operating expenses Cost of goods sold 1,143,358 1,155,412
2,498,635 2,544,278 Marketing, administrative and general expenses
875,719 822,389 1,774,583
1,675,876 2,019,077 1,977,801
4,273,218 4,220,154
Operating income 201,334 163,985 559,062 478,087
Interest income 815 1,188 1,305 2,226 Interest expense (21,534 )
(23,593 ) (42,542 ) (46,938 ) Other income (expense), net
(1,512 ) 41,557 (473 ) 43,303
Income before income taxes 179,103 183,137 517,352
476,678
Income taxes 40,829
27,712 108,661 106,026
Net income 138,274 155,425 408,691 370,652
Net
(income) loss attributable to noncontrolling interests -
(128 ) - (139 )
Net
income attributable to VF Corporation $ 138,274 $
155,297 $ 408,691 $ 370,513
Earnings
per common share attributable to
VF Corporation common
stockholders
Basic $ 1.27 $ 1.42 $ 3.73 $ 3.37 Diluted 1.24 1.40 3.66 3.31
Weighted average shares outstanding Basic 109,274
109,216 109,671 109,874 Diluted 111,479 111,228 111,726 111,992
Cash dividends per common share $ 0.87 $ 0.72 $ 1.74
$ 1.44
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 second quarter ends
on the Saturday closest to June 30. For presentation purposes
herein, all references to periods ended June 2013, December 2012
and June 2012 relate to the 13 week, 52 week and 13 week fiscal
periods ended June 29, 2013, December 29, 2012 and June 30, 2012,
respectively.
VF CORPORATION
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts)
June December June 2013
2012 2012 ASSETS Current assets
Cash and equivalents $ 320,112 $ 597,461 $ 330,512 Accounts
receivable, net 1,060,778 1,222,345 1,033,835 Inventories 1,522,809
1,354,158 1,570,298 Other current assets 394,008
275,619 405,164 Total current assets
3,297,707 3,449,583 3,339,809
Property, plant and
equipment 883,197 828,218 735,827
Intangible assets
2,889,106 2,917,058 2,928,311
Goodwill 2,001,375 2,009,757
1,996,355
Other assets 478,182 428,405
425,767 Total assets $ 9,549,567 $
9,633,021 $ 9,426,069
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Short-term
borrowings $ 46,350 $ 12,559 $ 681,835 Current portion of long-term
debt 402,949 402,873 2,801 Accounts payable 555,719 562,638 506,742
Accrued liabilities 639,280 754,142
576,661 Total current liabilities 1,644,298 1,732,212
1,768,039
Long-term debt 1,427,823 1,429,166
1,830,473
Other liabilities 1,293,389 1,346,018 1,303,505
Commitments and contingencies Stockholders' equity
Preferred Stock, par value $1 - - - Common Stock, stated value $1
109,710 110,205 109,438 Additional paid-in capital 2,666,117
2,527,868 2,421,564 Accumulated other comprehensive income (loss)
(440,871 ) (453,895 ) (416,386 ) Retained earnings 2,849,101
2,941,447 2,409,436 Total
stockholders' equity 5,184,057 5,125,625
4,524,052 Total liabilities and stockholders'
equity $ 9,549,567 $ 9,633,021 $ 9,426,069
VF CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended June 2013 2012
Operating activities Net income $ 408,691 $ 370,652
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 73,588 70,504 Amortization of intangible assets 22,992
24,221 Other amortization 20,135 16,046 Stock-based compensation
47,879 46,516 Provision for doubtful accounts 9,208 7,303 Pension
expense in excess of (less than) contributions (65,122 ) 38,297
Gain on sale of business - (41,745 ) Other, net 56,202 2,143
Changes in operating assets and
liabilities, net of sale of business:
Accounts receivable 133,830 71,072 Inventories (178,511 ) (136,497
) Other current assets (59,643 ) (45,419 ) Accounts payable (3,104
) (126,875 ) Accrued compensation (38,851 ) (65,615 ) Accrued
income taxes (105,035 ) (84,510 ) Accrued liabilities (24,233 )
(75,738 ) Other assets and liabilities (6,613 ) 2,774
Cash provided by operating activities 291,413 73,129
Investing activities Capital expenditures (155,454 )
(118,980 ) Proceeds from sale of business - 68,264 Software
purchases (28,715 ) (7,792 ) Other, net (4,307 )
3,854 Cash used by investing activities (188,476 ) (54,654 )
Financing activities Net increase in short-term
borrowings 34,783 400,166 Payments on long-term debt (1,417 )
(1,398 ) Purchase of Common Stock (281,586 ) (299,096 ) Cash
dividends paid (191,460 ) (158,581 ) Proceeds from issuance of
Common Stock, net 26,069 7,180 Tax benefits of stock option
exercises 37,933 25,243 Cash used by
financing activities (375,678 ) (26,486 )
Effect
of foreign currency rate changes on cash and equivalents
(4,608 ) (2,705 )
Net change in cash and
equivalents (277,349 ) (10,716 )
Cash and equivalents
- beginning of year 597,461 341,228
Cash and equivalents - end of period $ 320,112
$ 330,512
VF CORPORATION
Supplemental Financial Information
Business Segment Information
(Unaudited)
(In thousands)
Three Months Ended June Six Months Ended June
2013 2012 2013 2012
Coalition revenues Outdoor & Action Sports $
1,103,608 $ 1,039,974 $ 2,487,882 $ 2,303,941 Jeanswear 611,749
594,006 1,329,678 1,335,717 Imagewear 241,827 251,493 494,584
529,014 Sportswear 133,478 117,488 261,711 240,403 Contemporary
Brands 98,614 107,947 202,341 234,851 Other 31,135
30,878 56,084 54,315
Total coalition revenues $ 2,220,411 $ 2,141,786
$ 4,832,280 $ 4,698,241
Coalition profit Outdoor & Action Sports $ 100,458 $
82,469 $ 326,960 $ 284,169 Jeanswear 108,874 93,347 252,217 204,119
Imagewear 35,059 30,364 66,645 73,290 Sportswear 16,278 11,486
28,494 22,212 Contemporary Brands 7,878 11,992 20,454 26,850 Other
509 366 (2,148 ) (1,244 )
Total coalition profit 269,056 230,024 692,622 609,396
Corporate and other expenses (69,234 ) (24,482 )
(134,033 ) (88,006 )
Interest, net (20,719 )
(22,405 ) (41,237 ) (44,712 )
Income before
income taxes $ 179,103 $ 183,137 $ 517,352
$ 476,678
VF CORPORATION
Supplemental Financial Information
Business Segment Information – Constant
Currency Basis
(Unaudited)
(In thousands)
Three Months Ended June 2013 Exclude
As Reported Impact of Foreign Constant
under GAAP Currency Exchange Currency
Coalition revenues Outdoor & Action Sports $ 1,103,608 $
3,574 $ 1,100,034 Jeanswear 611,749 (858 ) 612,607 Imagewear
241,827 (459 ) 242,286 Sportswear 133,478 - 133,478 Contemporary
Brands 98,614 531 98,083 Other 31,135 -
31,135 Total coalition revenues $ 2,220,411
$ 2,788 $ 2,217,623
Coalition
profit Outdoor & Action Sports $ 100,458 $ 1,858 $ 98,600
Jeanswear 108,874 374 108,500 Imagewear 35,059 48 35,011 Sportswear
16,278 - 16,278 Contemporary Brands 7,878 119 7,759 Other
509 - 509 Total coalition
profit 269,056 2,399 266,657
Corporate and other
expenses (69,234 ) - (69,234 )
Interest, net
(20,719 ) - (20,719 )
Income before
income taxes $ 179,103 $ 2,399 $ 176,704
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 CORPORATION
Supplemental Financial Information
Business Segment Information – Constant
Currency Basis
(Unaudited)
(In thousands)
Six Months Ended June 2013 Exclude
As Reported Impact of Foreign Constant
under GAAP Currency Exchange Currency
Coalition revenues Outdoor & Action Sports $ 2,487,882 $
4,480 $ 2,483,402 Jeanswear 1,329,678 (2,786 ) 1,332,464 Imagewear
494,584 (762 ) 495,346 Sportswear 261,711 - 261,711 Contemporary
Brands 202,341 574 201,767 Other 56,084 -
56,084 Total coalition revenues $
4,832,280 $ 1,506 $ 4,830,774
Coalition profit Outdoor & Action Sports $ 326,960 $
2,649 $ 324,311 Jeanswear 252,217 474 251,743 Imagewear 66,645 48
66,597 Sportswear 28,494 - 28,494 Contemporary Brands 20,454 115
20,339 Other (2,148 ) - (2,148 )
Total coalition profit 692,622 3,286 689,336
Corporate
and other expenses (134,033 ) - (134,033 )
Interest, net
(41,237 ) - (41,237 )
Income
before income taxes $ 517,352 $ 3,286 $ 514,066
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 CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to
Non-GAAP Measures
(Unaudited)
(In thousands)
Three Months Three Months Ended
Operating Ended Operating June 2013
Margin June 2012 Margin Operating
income, as reported under GAAP $ 201,334 9.1% $ 163,985 7.7%
Timberland acquisition-related expenses 4,536 4,954
Operating income, as adjusted $
205,870 9.3%
$ 168,939 7.9%
Net income attributable to VF
Corporation, as reported under GAAP
$ 138,274 $ 155,297 Timberland acquisition-related expenses 3,816
3,430 Gain on sale of John Varvatos Enterprises, Inc. -
(35,814 )
Net income attributable to VF
Corporation, as adjusted
$ 142,090 $ 122,913
Diluted earnings per share, as reported
under GAAP
$ 1.24 $ 1.40 Timberland acquisition-related expenses 0.03 0.03
Gain on sale of John Varvatos Enterprises, Inc. -
(0.32 )
Diluted earnings per share, as adjusted $
1.27 $ 1.11
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)
Six Months Six Months Ended
Operating Ended Operating June 2013
Margin June 2012 Margin Operating
income, as reported under GAAP $ 559,062 11.6% $ 478,087 10.2%
Timberland acquisition-related expenses 7,278 9,596
Operating income, as adjusted $
566,340 11.7%
$ 487,683 10.4%
Net income attributable to VF
Corporation, as reported under GAAP
$ 408,691 $ 370,513 Timberland acquisition-related expenses 6,051
6,725 Gain on sale of John Varvatos Enterprises, Inc. -
(35,814 )
Net income attributable to VF
Corporation, as adjusted
$
414,742
$ 341,424 Guidance Six
Months Six Months Year Ended Ended
Ended June 2013 June 2012 December 2013
Diluted earnings per share, as reported
under GAAP
$ 3.66 $ 3.31 $ 10.78 Timberland acquisition-related expenses 0.05
0.06 0.07 Gain on sale of John Varvatos Enterprises, Inc. -
(0.32 ) -
Diluted earnings per
share, as adjusted $ 3.71 $ 3.05 $ 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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