- Revenues up 5 percent to $3.3
billion: Outdoor & Action Sports up 6 percent, International up
7 percent and Direct-to-Consumer up 14 percent.
- Gross margin improved by 90 basis
points to 47.6 percent.
- Adjusted EPS up 11 percent to $3.91
(up 14 percent to $3.89 on a GAAP basis).
- Quarterly dividend increased by 21
percent to $1.05 per share.
- Four-for-one stock split
announced.
- Full-year adjusted earnings guidance
unchanged after incremental investments of $0.25 per share to drive
future growth.
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 41st 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.
VF Corporation:Lance
Allega, 336-424-6082Director, Investor RelationsorCarole Crosslin,
336-424-7836Director, Corporate Communications
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