- Full year 2013 adjusted EPS up 13
percent (up 12 percent on a GAAP basis)
- Full year gross margin up 160 basis
points to 48.1 percent
- Full year revenues up 5 percent;
fourth quarter revenues up 8 percent
- 2014 revenues expected to increase 7
to 8 percent
- 2014 gross margin expected to reach
49 percent; operating margin should reach 15 percent
- 2014 EPS expected to grow 11 to 13
percent to $3.00 to $3.05
- 2014 cash flow from operations
expected to approach $1.65 billion
- Expect to return more than $1
billion to shareholders in 2014 through share repurchases and
dividends
VF Corporation (NYSE: VFC) today reported financial results for
its fourth quarter and full year ended December 28, 2013. All per
share amounts are presented on a diluted basis. “Adjusted amounts”
refer to non-GAAP measures that exclude expenses related to the
acquisition of the Timberland® and Smartwool® brands (“Timberland”)
and the gain on the sale of John Varvatos Enterprises, Inc. (“John
Varvatos”) as described in the “Adjusted Amounts” paragraph at the
end of this release.
“2013 was a terrific year for VF with record gross margin and
earnings per share,” said Eric Wiseman, VF Chairman and Chief
Executive Officer. “The combined power of our brands and platforms
remains our greatest competitive advantage enabling us to push the
envelope on product innovation to connect even more intensely with
consumers and providing stellar returns to our shareholders.
“Among many noteworthy brand performances, two significant
milestones included The North Face® brand passing $2 billion
in global revenues and the Vans® brand surpassing the $1.7
billion revenue mark, becoming VF’s second largest brand,” Wiseman
continued. “And with strong results from our direct-to-consumer and
international businesses, supported by outstanding execution from
our global supply chain, we’ve established excellent momentum that
we expect to contribute to a strong year for VF in 2014.”
Fourth Quarter 2013 Review
Revenues rose 8 percent to $3.3 billion, compared with
the same period of 2012, driven by double-digit growth in our
Outdoor & Action Sports, Sportswear, international and
direct-to-consumer businesses, and high single-digit percentage
growth in our Imagewear coalition.
Gross margin improved 80 basis points to 48.2 percent,
compared with 47.4 percent in the same period of 2012, with
improvements in nearly every coalition. The higher gross margin
reflects the continuing shift of our revenue mix toward higher
margin businesses as well as lower year-over-year product
costs.
SG&A as a percent of revenues rose 10 basis points to
32.7 percent in the fourth quarter. This increase includes the
impact of an incremental investment of nearly $30 million in
marketing to support growth in VF’s largest and fastest growing
businesses.
Operating income on an adjusted basis grew 11 percent to
$509 million in the fourth quarter, compared with $457 million in
the same period of 2012. On a GAAP basis, fourth quarter operating
income increased 13 percent to $508 million, compared with $450
million during last year’s same period. There were no material
Timberland acquisition-related expenses in the fourth quarter of
2013 while the fourth quarter of 2012 included $7 million of such
expenses. Adjusted operating margin was 15.5 percent,
compared with 15.1 percent in the fourth quarter of 2012. On a GAAP
basis, operating margin rose to 15.5 percent from 14.8 percent in
last year’s period.
Net income on an adjusted basis grew 7 percent to $368
million in the fourth quarter, compared with $344 million in the
same period of 2012. Adjusted earnings per share increased 6
percent to $0.82 per share compared with $0.77 per share during the
same period last year. Fourth quarter 2012 adjusted earnings per
share of $0.77 excluded $0.02 per share in Timberland
acquisition-related expenses. On a GAAP basis, fourth quarter 2013
net income was up 10 percent to $368 million or $0.82 per
share.
Full Year 2013 Review
Revenues increased 5 percent to a record $11.4 billion
compared with $10.9 billion in 2012. International revenues were up
8 percent driven by 7 percent growth in Europe and Asia Pacific,
and a 9 percent increase in the Americas (non-U.S.) region.
Gross margin rose by 160 basis points to a record 48.1
percent, compared with 46.5 percent in 2012, with improvements in
nearly every business. For the full year, the improvement in gross
margin reflects the continued shift in our revenue mix toward
higher margin businesses as well as lower product costs.
SG&A as a percent of full year revenue rose 50 basis
points to 33.6 percent. This increase includes the impact of higher
marketing expense that increased the SG&A ratio by 60 basis
points, including the nearly $40 million in incremental marketing
investments in the second half of 2013 that increased the SG&A
ratio by 40 basis points.
Operating income on an adjusted basis increased 11
percent to $1.7 billion in 2013. On a GAAP basis, full year
operating income rose 12 percent to $1.6 billion from $1.5 billion
in 2012. Acquisition-related expenses for Timberland in 2013 and
2012 were $11 million and $31 million, respectively. Adjusted
operating margin was 14.5 percent compared with 13.8 percent in
2012. On a GAAP basis, operating margin was 14.4 percent versus
13.5 percent in 2012.
Net income on an adjusted basis rose 13 percent to $1.2
billion compared to $1.1 billion in 2012. Adjusted earnings per
share, which excludes $0.02 in Timberland acquisition-related
expenses in 2013 increased 13 percent, to $2.73 from $2.41 in the
same period last year. Adjusted earnings per share of $2.41 in 2012
exclude a combined $0.02 in Timberland acquisition-related expenses
and the gain from the sale of John Varvatos. On a GAAP basis, full
year net income was $1.2 billion while earnings per share grew 12
percent to $2.71 per share.
Coalition Review
Revenues for the Outdoor & Action Sports coalition
increased 12 percent in the quarter to $1.9 billion with balanced
growth across the U.S. and international markets as well as in
wholesale and direct-to-consumer channels. Full year Outdoor &
Action Sports revenues were up 9 percent in 2013.
Fourth quarter revenues for The North Face® brand rose 12
percent globally driven by more than 30 percent growth in
direct-to-consumer sales and a mid single-digit increase in the
brand’s wholesale business. By region, The North Face® brand’s
revenues were up 10 percent in the Americas and increased at a
high-teen percentage rate in both Europe and Asia Pacific. For the
full year, revenues for The North Face® brand grew 7 percent,
establishing VF’s first $2 billion brand.
Revenues for the Vans® brand in the fourth quarter were up 14
percent with strong, double-digit growth across all geographies, as
well as in the brand’s wholesale and direct-to-consumer platforms.
Revenues in the Americas region were up at a low double-digit rate
in the quarter, which contributed to the brand surpassing the $1
billion mark in annual revenues in its largest region. In Europe,
the Vans® brand grew 20 percent and was up nearly 20 percent in the
Asia Pacific region. Revenues for the Vans® brand globally for the
full year were up 17 percent.
Revenues for the Timberland® brand were up 13 percent in the
fourth quarter. In the Americas region, revenues increased at a
high-teen rate driven by strong direct-to-consumer and wholesale
growth rates. In Europe, the Timberland® brand posted its strongest
quarter of the year with a low-teen rate percentage increase in
revenues. And in Asia Pacific, where the brand’s largest market is
Japan, fourth quarter revenues were down modestly, but up at a high
single-digit rate on a constant-dollar basis. Globally, the
Timberland® brand’s growth was balanced between its
direct-to-consumer and wholesale businesses in the quarter. Full
year Timberland® brand revenues were up 5 percent.
Fourth quarter operating income for Outdoor & Action Sports
rose 11 percent to $358 million. Operating margin decreased 10
basis points to 18.7 percent, compared with 18.8 percent in the
2012 period, including the impact of incremental marketing
investments in The North Face®, Vans® and Timberland® brands in
2013.
Jeanswear fourth quarter revenues were flat at $734
million. Revenues in the Americas business were flat, including
flat results in the U.S. offset by declines in Central and Latin
America. In Europe, revenues were up at a mid single-digit
percentage rate and sales in our Asia Pacific region were down
slightly. In 2013, global Jeanswear revenues were up 1 percent.
Fourth quarter revenues for the Wrangler® brand were up 5
percent driven by strength in the Americas region, with mid
single-digit growth in western specialty and slight growth in its
U.S. mass channel business, offset by a 10 percent decline (up 8
percent in constant dollars) in Latin America. Wrangler® brand
revenues in Europe were up 4 percent (flat on a constant dollar
basis). Fourth quarter revenues for the Lee® brand were down 6
percent driven by a mid single-digit percentage increase (up low
single-digit percentage in constant dollars) in Europe and Asia,
offset by a 10 percent decline in the Americas region, where the
business is being negatively impacted by ongoing challenges in the
U.S. mid-tier channel.
Operating income for Jeanswear in the fourth quarter rose 2
percent to $134 million. Operating margin grew 40 basis points to
18.3 percent in the quarter, with improvements primarily
attributable to strong performances from both the Wrangler® and
Lee® brands outside the U.S.
Imagewear revenues were up 9 percent in the fourth
quarter to $287 million. This increase is largely due to a contract
that was renewed later than expected. For the full year, revenues
for the Imagewear coalition were down 1 percent. Fourth quarter
operating income for Imagewear was up 31 percent to $45 million,
with a 250 basis point improvement in operating margin to 15.6
percent, reflecting meaningful gross margin expansion.
Sportswear had a strong quarter with revenues increasing
14 percent to $208 million. The Nautica® brand grew 11 percent with
solid increases in both its wholesale and direct-to-consumer
businesses. The Kipling® brand’s U.S. business achieved a 33
percent increase in revenues compared with the same period last
year. Globally, the Kipling® brand grew 28 percent. For the year,
Sportswear coalition revenues were up 8 percent. In the fourth
quarter, operating income increased 11 percent to $36 million,
while operating margin declined 50 basis points to 17.2
percent.
In a business environment that continues to be challenging for
premium denim, fourth quarter revenues for the Contemporary
Brands coalition were up 1 percent to $108 million. Full year
revenues for the coalition were down 7 percent, or down 2 percent
excluding the impact of the sale of the John Varvatos® brand in
April 2012. Contemporary Brands’ fourth quarter operating income
was flat compared with last year’s fourth quarter at $9 million.
Operating margin was also comparable at 8.3 percent.
International Review
International revenues in the fourth quarter increased 11
percent, up 10 percent on a constant currency basis. Revenues in
Europe rose 15 percent, up 10 percent in constant currency, with
positive results from nearly every brand in VF’s portfolio. In Asia
Pacific, revenues were up 7 percent (up 11 percent in constant
currency) driven by 14 percent growth in China, which included
strong results from nearly every brand. As anticipated, the Lee®
brand returned to growth during the quarter in China. Americas
(non-U.S.) revenues increased 5 percent (up 11 percent in constant
currency) driven by particular strengths in the Vans®, Timberland®
and The North Face® brands. International revenues were 38 percent
of total VF revenues in 2013 compared to 37 percent in 2012.
Direct-to-Consumer Review
Direct-to-consumer revenues grew 14 percent in the fourth
quarter driven by a 32 percent increase in The North Face® brand, a
12 percent increase in the Vans® brand, 8 percent increases from
both the Timberland® and Nautica® brands, and a 44 percent increase
in the Kipling® brand. Fifty-three stores were opened across our
brands during the quarter bringing the total number of VF owned
retail stores to 1,246. For the full year 2013, direct-to-consumer
revenues grew 13 percent and accounted for 22 percent of total VF
revenues compared with 21 percent in 2012.
Balance Sheet Review
Inventories were up 3 percent compared with December 2012 levels
reflecting VF’s continued focus on operational efficiency. For the
full year, VF’s cash generation from operations exceeded $1.5
billion. The company returned nearly $700 million to
shareholders through dividends and share repurchases despite
contributing $100 million to its pension plan and repaying $400
million of debt.
2014 Guidance
“As we look to 2014, we are confident in the continued global
success of VF’s portfolio of powerful brands and platforms,”
Wiseman said. “Our proven execution and financial discipline makes
us the best positioned company in our industry to consistently
deliver products and experiences that consumers want and returns
that shareholders have come to expect.”
Key points related to VF’s full year 2014 outlook include:
- Revenue expected to increase by
7 to 8 percent including growth in every coalition. Outdoor
& Action Sports coalition revenues should increase at a low
double-digit rate including a mid-teen percentage growth rate from
the Vans® brand, approximately 12 percent growth for The North
Face® brand and 10 percent growth for the Timberland® brand.
Jeanswear and Imagewear are expected to grow at a low
single-digit rate. Sportswear is expected to grow at a high
single-digit rate and Contemporary Brands should see mid
single-digit percentage growth.
- International revenue should
grow 10 percent, driven by high-teen growth in Asia and high
single-digit growth in both Europe and the Americas (non-U.S.)
regions. International revenues should approximate 38 percent of
total revenues in 2014.
- In 2014, to better represent the
operations of its direct-to-consumer business, VF will begin
to include its concession locations in its direct-to-consumer
revenues. Concessions are retail locations (outside the U.S.) where
the company is responsible for all aspects of operations without
ownership of the retail space. After adjusting 2013
direct-to-consumer revenues for this change, direct-to-consumer is
expected to grow at a high-teen percentage rate in 2014 and should
represent 26 percent of total VF revenues. Direct-to-consumer
growth in 2014 will be driven by approximately 150 store openings,
comp store growth and an expected increase of more than 30 percent
in e-commerce revenues.
- Expect continued margin expansion,
including a 90 basis point improvement in gross margin to 49
percent, and about 60 basis point increase in operating
margin to 15 percent.
- Earnings per share should
increase 11 to 13 percent to $3.00 to 3.05.
- Expect record cash flow from
operations, approaching $1.65 billion.
- Expect to spend approximately $700
million under the company’s share repurchase program; when combined
with annual dividend, should return more than $1 billion to
shareholders in 2014.
- Other full year assumptions
include a 23.5 to 24 percent effective tax rate, a
negligible impact from changes in foreign currency and
capital expenditures of approximately $270 million.
In terms of quarterly revenue comparisons in 2014, the cadence
should be similar to that of 2013 – although at a higher percentage
increase per quarter. Accordingly, we expect mid single-digit
growth in the first half of 2014 followed by high single-digit
growth in the second half of the year. First quarter earnings will
face a tougher comparison against last year’s first quarter
earnings per share due to the inclusion of $0.03 per share from
discrete tax benefits primarily related to the impact of U.S. tax
law changes (American Taxpayer Relief Act of 2012) enacted in
January 2013. In the second half of 2014, revenue growth and
profitability should be the strongest comparison, reflecting the
growing contribution of the more seasonally driven Outdoor &
Action Sports coalition and expansion of our direct-to-consumer
business.
Share Repurchase Authorization
In December 2013, VF’s Board of Directors authorized an
additional 50 million shares of common stock for its
repurchase program. The company’s previous program, approved
in February 2010, authorized 10 million shares of
common stock, of which approximately 3 million shares are
still available for execution. This brings the total current
authorization of VF’s new program to 53 million
shares.
Repurchases under VF’s new program will be made in open market
or privately negotiated transactions in compliance with Securities
and Exchange Commission Rule 10b-18, subject to market conditions,
applicable legal requirements and other relevant factors. This
share repurchase plan does not obligate VF to acquire any
particular amount of common stock, and it may be suspended at any
time at the company's discretion. VF had approximately 440 million
shares of common stock outstanding as of Jan. 31, 2014.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.2625
per share, payable on March 20, 2014 to shareholders of record on
March 10, 2014. As a reminder, prior to VF’s four-for-one stock
split, the quarterly dividend was $1.05 per share.
Adjusted Amounts
This release refers to adjusted amounts that exclude
restructuring and other items related to the acquisition of
Timberland, which approximated $11 million ($0.02 per share) for
the full year 2013. Adjusted amounts for 2012 exclude Timberland
acquisition related expenses of $31 million ($0.06 per share) and
the gain on the sale of John Varvatos of approximately $42 million
($0.08 per share). 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.
Webcast Information
VF will hold its fourth quarter conference call and webcast
today at 8:30 a.m. Eastern Time. Interested parties should call
888-455-2238 (domestic) or 719-325-2492 (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 Feb. 14 through Feb. 21, 2014, via telephone at 877-870-5176
(access code: 8653621) 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,” “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.
VF CORPORATION
Consolidated Statements of
Income
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended
December % Twelve Months Ended December %
2013 2012 Change
2013 2012 Change
Net sales $ 3,258,712 $ 3,003,360 9% $ 11,302,350 $
10,766,020 5%
Royalty income 31,387
29,900 5% 117,298 113,835 3%
Total revenues 3,290,099
3,033,260 8% 11,419,648 10,879,855
5%
Costs and operating expenses Cost of goods
sold 1,704,690 1,595,512 7% 5,931,469 5,817,880 2% Selling, general
and administrative expenses 1,077,027 987,460
9% 3,841,032 3,596,708 7%
2,781,717 2,582,972 8% 9,772,501
9,414,588 4%
Operating income 508,382
450,288 13% 1,647,147 1,465,267 12% Interest income 1,577
495 219% 4,141 3,353 24% Interest expense (20,985 ) (22,826 ) 8%
(84,773 ) (93,605 ) 9% Other income (expense), net (2,302 )
1,988 (216%) (4,025 ) 46,860
(109%)
Income before income taxes 486,672 429,945 13%
1,562,490 1,421,875 10%
Income taxes 119,005
95,777 24% 352,371
335,737 5%
Net income 367,667 334,168 10%
1,210,119 1,086,138 11%
Net (income) loss attributable to
noncontrolling interests - -
- (139 )
Net income attributable to VF
Corporation $ 367,667 $ 334,168 10% $ 1,210,119
$ 1,085,999 11%
Earnings per common share
attributable to
VF Corporation common
stockholders
Basic $ 0.84 $ 0.76 11% $ 2.76 $ 2.47 12% Diluted 0.82 0.75 9% 2.71
2.43 12%
Weighted average shares outstanding Basic
439,023 439,572 438,657 439,292 Diluted 447,746 448,240 446,809
447,616
Cash dividends per common share $ 0.2625 $
0.2175 21% $ 0.9150 $ 0.7575 21%
Basis of presentation: VF operates
and reports using a 52/53 week fiscal year ending on the Saturday
closest to December 31 of each year. Similarly, the fiscal fourth
quarter ends on the Saturday closest to December 31. For
presentation purposes herein, all references to periods ended
December 2013 and December 2012 relate to the 13 week and 52 week
fiscal periods ended December 28, 2013 and December 29, 2012,
respectively.
VF CORPORATION
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share
amounts)
December December 2013
2012 ASSETS Current
assets Cash and equivalents $ 776,403 $ 597,461 Accounts
receivable, net 1,360,443 1,222,345 Inventories 1,399,062 1,354,158
Other current assets 347,074 275,619
Total current assets 3,882,982 3,449,583
Property, plant
and equipment 932,792 828,218
Intangible assets
2,960,201 2,917,058
Goodwill 2,021,750 2,009,757
Other
assets 517,718 428,405 Total assets
$ 10,315,443 $ 9,633,021
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Short-term
borrowings $ 18,810 $ 12,559 Current portion of long-term debt
5,167 402,873 Accounts payable 638,732 562,638 Accrued liabilities
905,292 754,142 Total current
liabilities 1,568,001 1,732,212
Long-term debt
1,426,829 1,429,166
Other liabilities 1,243,575 1,346,018
Commitments and contingencies Stockholders' equity
Preferred Stock, par value $1 - - Common Stock, stated value $0.25
110,078 110,205 Additional paid-in capital 2,746,590 2,527,868
Accumulated other comprehensive income (loss) (211,720 ) (453,895 )
Retained earnings 3,432,090 2,941,447
Total stockholders' equity 6,077,038 5,125,625
Total liabilities and stockholders' equity $ 10,315,443
$ 9,633,021
VF CORPORATION
Consolidated Statements of Cash
Flows
(Unaudited)
(In thousands)
Twelve Months Ended December
2013 2012 Operating
activities Net income $ 1,210,119 $ 1,086,138 Adjustments to
reconcile net income to cash provided by operating activities:
Depreciation 157,810 148,969 Amortization of intangible assets
45,787 47,929 Other amortization 49,676 41,058 Stock-based
compensation 87,118 92,814 Provision for doubtful accounts 15,756
19,264 Deferred income taxes
(12,370
)
(20,797 ) Pension expense in excess of (less than) contributions
(28,102 ) (20,198 ) Gain on sale of business - (44,485 ) Other, net
14,306
(40,931 ) Changes in operating assets and liabilities, net of sale
of business: Accounts receivable (155,053 ) (111,571 ) Inventories
(47,240 ) 87,620 Other current assets (9,194 ) 32,382 Accounts
payable 75,073 (74,294 ) Accrued compensation (1,139 ) (18,907 )
Accrued income taxes 16,628 26,213 Accrued liabilities 85,611
(17,005 ) Other assets and liabilities 1,255
40,801 Cash provided by operating activities 1,506,041
1,275,000
Investing activities Capital expenditures
(271,153 ) (251,940 ) Business acquisitions, net of cash acquired -
(1,750 ) Proceeds from sale of businesses - 72,519 Software
purchases (53,989 ) (30,890 ) Other, net (25,131 )
(8,230 ) Cash used by investing activities (350,273 ) (220,291 )
Financing activities Net increase (decrease) in
short-term borrowings 9,032 (269,010 ) Payments on long-term debt
(404,872 ) (2,776 ) Purchase of Common Stock (282,024 ) (307,282 )
Cash dividends paid (402,136 ) (333,229 ) Proceeds from issuance of
Common Stock, net 48,029 62,770 Tax benefits of stock option
exercises 48,140 47,213 Other, net - (201 )
Cash used by financing activities (983,831 ) (802,515 )
Effect of foreign currency rate changes on cash and
equivalents 7,005 4,039
Net change in cash and equivalents 178,942 256,233
Cash and equivalents - beginning of year 597,461
341,228
Cash and equivalents - end
of period $ 776,403 $ 597,461
VF CORPORATION
Supplemental Financial
Information
Business Segment Information
(Unaudited)
(In thousands)
Three Months Ended December % Twelve
Months Ended December % 2013
2012 Change 2013
2012 Change Coalition revenues
Outdoor & Action Sports $ 1,919,322 $ 1,709,863 12% $ 6,379,167
$ 5,866,071 9% Jeanswear 734,075 734,764 - 2,810,994 2,789,293 1%
Imagewear 286,888 262,137 9% 1,065,952 1,075,677 (1%) Sportswear
207,774 182,724 14% 624,693 577,317 8% Contemporary Brands 107,714
106,944 1% 415,053 445,960 (7%) Other 34,326
36,828 (7%) 123,789 125,537 (1%)
Total coalition revenues $ 3,290,099 $ 3,033,260
8% $ 11,419,648 $ 10,879,855 5%
Coalition profit Outdoor & Action Sports $ 358,247 $
322,244 11% $ 1,106,384 $ 1,019,425 9% Jeanswear 134,331 131,394 2%
544,882 466,960 17% Imagewear 44,860 34,300 31% 152,203 145,053 5%
Sportswear 35,676 32,267 11% 88,157 72,978 21% Contemporary Brands
8,915 8,896 - 38,825 49,182 (21%) Other 1,633
(365 ) 547% (562 ) (232 ) (142%) Total
coalition profit 583,662 528,736 10% 1,929,889 1,753,366 10%
Corporate and other expenses (77,582 ) (76,460 ) (1%)
(286,767 ) (241,239 ) (19%)
Interest, net (19,408 )
(22,331 ) 13% (80,632 ) (90,252 ) 11%
Income before income taxes $ 486,672 $ 429,945
13% $ 1,562,490 $ 1,421,875 10%
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Constant
Currency Basis
(Unaudited)
(In thousands)
Three Months Ended December 2013
Exclude As Reported Impact of Foreign under
GAAP Currency Exchange Constant Currency
Coalition revenues Outdoor & Action Sports $ 1,919,322 $
16,983 $ 1,902,339 Jeanswear 734,075 (4,805 ) 738,880 Imagewear
286,888 (1,087 ) 287,975 Sportswear 207,774 - 207,774 Contemporary
Brands 107,714 1,184 106,530 Other 34,326 -
34,326 Total coalition revenues $
3,290,099 $ 12,275 $ 3,277,824
Coalition profit Outdoor & Action Sports $ 358,247 $
3,583 $ 354,664 Jeanswear 134,331 358 133,973 Imagewear 44,860 (32
) 44,892 Sportswear 35,676 - 35,676 Contemporary Brands 8,915 166
8,749 Other 1,633 - 1,633
Total coalition profit 583,662 4,075 579,587
Corporate and other expenses (77,582 ) - (77,582 )
Interest, net (19,408 ) -
(19,408 )
Income before income taxes $ 486,672
$ 4,075 $ 482,597
Constant Currency Financial
Information
VF is a global company that reports
financial information in U.S. dollars in accordance with generally
accepted accounting principles. Foreign currency exchange rate
fluctuations affect the amounts reported by VF from translating its
foreign revenues and expenses into U.S. dollars. These rate
fluctuations can have a significant effect on reported operating
results. As a supplement to our reported operating results, we
present constant currency financial information, which is a
non-GAAP financial measure. We use constant currency information to
provide a framework to assess how our businesses performed
excluding the effects of changes in foreign currency translation
rates. Management believes this information is useful to investors
to facilitate comparisons of operating results and better identify
trends in our businesses.
To calculate coalition revenues and
profits on a constant currency basis, operating results for the
current year period for entities reporting in currencies other than
the U.S. dollar are translated into U.S. dollars at the average
exchange rates in effect during the comparable period of the prior
year (rather than the actual exchange rates in effect during the
current year period).
These constant currency performance
measures should be viewed in addition to, and not in lieu of or
superior to, our operating performance measures calculated in
accordance with GAAP. The constant currency information presented
may not be comparable to similarly titled measures reported by
other companies.
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Constant
Currency Basis
(Unaudited)
(In thousands)
Twelve Months Ended December 2013
Exclude As Reported Impact of Foreign under
GAAP Currency Exchange Constant Currency
Coalition revenues Outdoor & Action Sports $ 6,379,167 $
53,426 $ 6,325,741 Jeanswear 2,810,994 (8,286 ) 2,819,280 Imagewear
1,065,952 (2,420 ) 1,068,372 Sportswear 624,693 - 624,693
Contemporary Brands 415,053 3,099 411,954 Other 123,789
- 123,789 Total coalition
revenues $ 11,419,648 $ 45,819 $ 11,373,829
Coalition profit Outdoor & Action Sports $
1,106,384 $ 16,122 $ 1,090,262 Jeanswear 544,882 2,208 542,674
Imagewear 152,203 12 152,191 Sportswear 88,157 - 88,157
Contemporary Brands 38,825 494 38,331 Other (562 ) -
(562 ) Total coalition profit 1,929,889 18,836
1,911,053
Corporate and other expenses (286,767 ) -
(286,767 )
Interest, net (80,632 ) -
(80,632 )
Income before income taxes $
1,562,490 $ 18,836 $ 1,543,654
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, except per share
amounts)
Three Months Three Months Ended
Operating Ended Operating December 2013
Margin December 2012 Margin
Operating income, as reported under GAAP $ 508,382 15.5% $
450,288 14.8% Timberland acquisition-related expenses 647
6,811
Operating income, as adjusted $
509,029 15.5%
$ 457,099 15.1%
Net income attributable to VF Corporation, as reported
under GAAP $ 367,667 $ 334,168 Timberland acquisition-related
expenses 570 10,226
Net income attributable
to VF Corporation, as adjusted $ 368,237
$ 344,394 Diluted earnings per
share, as reported under GAAP $ 0.82 $ 0.75 Timberland
acquisition-related expenses - 0.02
Diluted
earnings per share, as adjusted $ 0.82 $ 0.77
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 CORPORATION
Supplemental Financial
Information
Reconciliation of Select GAAP Measures
to Non-GAAP Measures
(Unaudited)
(In thousands, except per share
amounts)
Twelve Months Twelve Months Ended
Operating Ended Operating December 2013
Margin December 2012 Margin
Operating income, as reported under GAAP $ 1,647,147
14.4% $ 1,465,267 13.5% Timberland acquisition-related expenses
10,684 30,765
Operating income, as
adjusted $ 1,657,831 14.5%
$
1,496,032 13.8%
Net income
attributable to VF Corporation, as reported under GAAP $
1,210,119 $ 1,085,999 Timberland acquisition-related expenses 8,826
27,927 Gain on sale of John Varvatos Enterprises, Inc. -
(35,814 )
Net income attributable to VF
Corporation, as adjusted $ 1,218,945
$ 1,078,112 Twelve Months
Twelve Months Ended Ended December 2013
December 2012 Diluted earnings per share,
as reported under GAAP $ 2.71 $ 2.43 Timberland
acquisition-related expenses 0.02 0.06 Gain on sale of John
Varvatos Enterprises, Inc. - (0.08 )
Diluted earnings per share, as adjusted $ 2.73 $ 2.41
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
Contacts:Lance Allega, 336-424-6082Director,
Investor RelationsorCarole Crosslin, 336-424-7836Director,
Corporate Communications
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