- 2014 revenues up 8 percent to $12.3
billion
- 2014 gross margin up 70 basis points
to 48.8 percent
- 2014 adjusted EPS, excluding a $396
million pre-tax noncash impairment charge, was up 14 percent to
$3.08 ($2.38 on a GAAP basis)
- 2015 currency neutral revenues
expected to increase 8 percent (up 3 percent reported)
- 2015 gross margin expected to reach
49.2 percent; net of an anticipated 30 basis points of negative
impact from changes in foreign currency
- 2015 currency neutral EPS expected
to increase 12 percent (up 4 percent reported) compared to adjusted
EPS of $3.08 in 2014
- Expect to return more than $1.2
billion to shareholders in 2015 through share repurchases and
dividends
VF Corporation (NYSE: VFC) today reported financial results for
its fourth quarter and full year ended January 3, 2015. All per
share amounts are presented on a diluted basis. Discussions in this
release that refer to “adjusted”, “currency neutral” and “reported”
amounts are described under the “Adjusted Amounts – Excluding
Noncash Impairment Charge” and “Currency Neutral – Excluding the
Impact of Foreign Currency” paragraphs that follow. Reconciliations
of GAAP measures to adjusted and currency neutral amounts are
presented in the supplemental financial information included with
this release, which identifies and quantifies all excluded
items.
“Our powerful brands and the competitive advantage of our
business platforms combined with our relentless focus on
operational excellence delivered another year of strong returns for
our shareholders,” said Eric Wiseman, VF Chairman, President and
Chief Executive Officer. “Our four largest brands: The North Face®,
Vans®, Timberland®, and Wrangler®, along with many of our other
brands, were strong performers as we grew our business in every
region and channel around the world.
“We are very pleased to report that Vans® passed the $2 billion
dollar mark in 2014 to become VF’s second $2 billion brand along
with The North Face®,” Wiseman continued. “As we end the second
year of our five-year plan we’re on track with our 2017
targets.”
Fourth Quarter 2014 Review
- Revenues rose 9 percent to $3.6
billion driven by strong growth in our Outdoor & Action Sports
coalition and our international and direct-to-consumer businesses.
On a currency neutral basis, revenues increased 11 percent over the
2013 quarter. VF uses a 52/53 week fiscal year and the fourth
quarter of 2014 included a 53rd week, which added approximately
$100 million in revenue, representing about 3 percentage points of
growth.
- Gross margin improved 80 basis
points to a record 49 percent driven primarily by the continuing
shift of our revenue mix toward higher margin businesses.
- A $396 million pre-tax, noncash
impairment charge ($0.70 per share) was recorded to reduce the
carrying value of the goodwill and intangible assets related to our
7 For All Mankind®, Ella Moss® and Splendid® brands.
- SG&A as a percent of
revenues was up 20 basis points to 32.9 percent.
- Operating income on an adjusted
basis grew 14 percent to $578 million in the fourth quarter,
compared with $508 million in the same period of 2013. On a GAAP
basis, fourth quarter operating income was $182 million. Adjusted
operating margin improved to 16.2 percent, compared with
15.5 percent in the fourth quarter of 2013. On a GAAP basis,
operating margin was 5.1 percent in 2014.
- Adjusted earnings per share
increased 20 percent to $0.98 per share compared with $0.82 per
share during the same period last year. On a GAAP basis, earnings
per share were $0.28.
Full Year 2014 Review
- Revenues increased 8 percent to
a record $12.3 billion, compared with $11.4 billion in 2013, driven
by continued strength in our Outdoor & Action Sports coalition,
and our international and direct-to-consumer businesses. On a
currency neutral basis, revenue increased 8 percent for the year.
Inclusion of the 53rd week, as previously noted, added
approximately 1 percentage point of growth in 2014.
- Gross margin improved 70 basis
points to a record 48.8 percent, compared with 48.1 percent in
2013. For the full year, the improvement in gross margin reflects
the continued shift in our revenue mix toward higher margin
businesses as well as our previously disclosed change in
classification of retail concession fees.
- SG&A as a percent of full
year revenues was up 30 basis points to 33.9 percent. This increase
was primarily due to the change in classification of retail
concession fees.
- Operating income on an adjusted
basis grew 11 percent to $1.8 billion, compared with $1.6 billion
in 2013. On a GAAP basis, full year operating income was $1.4
billion in 2014. Adjusted operating margin was 14.9 percent
in 2014, compared with 14.4 percent in 2013. On a GAAP basis,
operating margin was 11.7 percent in 2014.
- Adjusted earnings per share
increased 14 percent to $3.08 per share compared with $2.71 per
share in 2013. On a GAAP basis, full year earnings per share were
$2.38.
Coalition Review
Fourth quarter revenues for the Outdoor & Action
Sports coalition increased 13 percent (up 16 percent currency
neutral) to $2.2 billion. Full year Outdoor & Action Sports
revenues increased 13 percent in 2014 (up 14 percent currency
neutral).
Fourth quarter revenues for The North Face® brand rose 12
percent (up 14 percent currency neutral) including a 30 percent
increase in direct-to-consumer sales. By region, The North Face®
brand’s revenues were up at a mid-teen percentage rate in the
Americas, up more than 25 percent in Asia Pacific and down at a mid
single-digit rate in Europe (up at a low single-digit rate currency
neutral). For the full year, revenues for The North Face® brand
grew 11 percent (up 12 percent currency neutral) to reach $2.3
billion.
Revenues for the Vans® brand in the fourth quarter were up 17
percent (up 20 percent currency neutral) with 30 percent growth in
its direct-to-consumer channel and strong wholesale growth.
Revenues in the Americas region were up 20 percent in the quarter,
up more than 50 percent in the Asia Pacific region and down
slightly in Europe due to the changes in foreign currency. On a
currency neutral basis, Vans® brand revenues in Europe were up at a
high single-digit rate in the quarter. Revenues for the Vans® brand
for the full year were up 17 percent, firmly establishing its place
as VF’s second $2 billion brand.
Revenues for the Timberland® brand were up 11 percent (up 15
percent currency neutral) in the fourth quarter driven by balanced
wholesale and direct-to-consumer gains. In the Americas region,
revenues were up nearly 25 percent driven by significant wholesale
growth and strong direct-to-consumer sales. In Asia Pacific, fourth
quarter revenues were up at a mid single-digit percentage rate (up
at a low double-digit rate currency neutral). And in Europe, the
Timberland® brand was down at a low single-digit rate (up at a mid
single-digit rate currency neutral). Full year Timberland® brand
revenues were up 13 percent to $1.8 billion, or an increase of 15
percent on a currency neutral basis.
Fourth quarter operating income for Outdoor & Action Sports
rose 21 percent to $432 million. Operating margin increased 130
basis points to 20 percent in the quarter and improved for the full
year by 90 basis points to 18.2 percent.
Jeanswear fourth quarter revenues were up 3 percent (up 5
percent currency neutral) to $755 million. As anticipated, revenue
comparisons for the Americas region improved with sales up at a low
single-digit rate (up mid single-digit currency neutral). In
Europe, revenues were up at a low single-digit rate (up 10 percent
currency neutral) and in Asia, revenues were up at a mid
single-digit rate. In 2014, global Jeanswear revenues were flat at
$2.8 billion (up 1 percent currency neutral).
Fourth quarter global revenues for the Wrangler® brand were up 3
percent (up 6 percent currency neutral) driven by strength in the
Americas region, including a low-teen increase in its western
specialty business and low single-digit growth in the U.S. mass
channel. Wrangler® brand revenues in Europe were down 4 percent (up
5 percent currency neutral) and down slightly in Asia Pacific. Full
year revenues for the Wrangler® brand increased 2 percent (up 4
percent currency neutral) to reach $1.7 billion.
Global revenues for the Lee® brand in the fourth quarter were up
2 percent (up 5 percent currency neutral) driven by a high
single-digit percentage increase in Asia Pacific and a high
single-digit percentage increase in Europe (up at a high teen rate
currency neutral). This was offset by flat results in the Americas
region where the business continues to work through ongoing
challenges in the U.S. mid-tier channel. For the full year, global
Lee® brand revenues were down 2 percent (down 1 percent currency
neutral) at $1.0 billion.
Operating income for Jeanswear in the fourth quarter rose 5
percent to $142 million. Operating margin increased 40 basis points
to 18.7 percent in the quarter, and was down 60 basis points for
the full year to 18.8 percent due to challenges primarily related
to the U.S. business.
Imagewear revenues were up 4 percent (up 5 percent
currency neutral) in the fourth quarter to $298 million driven by
particular strength in the Licensed Sports Group (LSG) business.
For the full year, revenues for the Imagewear coalition were up 4
percent to $1.1 billion including growth in both the Image business
driven by new product introductions in our Red Kap® and Bulwark®
brands and the LSG business, which had strong demand for National
Football League® and Major League Baseball® products.
Fourth quarter operating income for Imagewear was up 8 percent
to $48 million, with a 60 basis point improvement in operating
margin to 16.2 percent. For the full year, Imagewear operating
margin improved 60 basis points to 14.9 percent.
Sportswear fourth quarter revenues increased 4 percent to
$215 million. Nautica® brand revenues were flat with a low-teen
percentage rate increase in the direct-to-consumer business being
offset by a high single-digit decline in wholesale sales. The
Kipling® brand’s U.S. business achieved a 25 percent increase in
revenues compared with the same period last year. For the year,
Sportswear coalition revenues were up 4 percent. Globally, the
Kipling® brand grew 13 percent in the fourth quarter, up 18 percent
currency neutral.
In the fourth quarter, operating income decreased 10 percent to
$32 million with a 220 basis point decline in operating margin to
15 percent. 2014 operating margin for the Sportswear coalition
declined by 210 basis points to 12 percent, impacted by a
challenging environment in the U.S. department store channel.
Contemporary Brands coalition fourth quarter revenues
were down 1 percent (up 1 percent currency neutral), to $107
million, reflecting continuing challenging consumer trends in
women’s contemporary apparel and premium denim.
International Review
International revenues in the fourth quarter grew 5 percent, or
13 percent on a currency neutral basis. Revenues in Europe were
down 1 percent (up 8 percent currency neutral) and in the Asia
Pacific region were up 17 percent (up 20 percent currency neutral),
including 20 percent growth in China. Revenues in the Americas
(non-U.S.) region were up 9 percent (up 19 percent currency
neutral). International revenues were 33 percent of total VF fourth
quarter sales compared with 34 percent in the same period of 2013.
For the full year, international revenues represented 38 percent of
total VF sales, the same as in fiscal 2013.
Direct-to-Consumer Review
Direct-to-consumer revenues grew 22 percent (up 25 percent
currency neutral) in the fourth quarter with strong double-digit
increases in all regions of the world and growth in every VF brand
with a retail format. Seventy-five stores were opened during the
fourth quarter bringing the total number of VF owned retail stores
to 1,401. As previously discussed, effective in 2014, VF now
includes revenues from its concession locations in its
direct-to-consumer business. Direct-to-consumer revenues reached 32
percent of total revenues in the fourth quarter compared with 29
percent in the 2013 period (27 percent prior to the concession
classification change). Direct-to-consumer revenues were 26 percent
of total VF revenues in 2014 compared with 24 percent in 2013 (22
percent prior to the concession classification change). References
to direct-to-consumer and wholesale revenue growth rates reflect
the change in reporting of concessions in all periods.
Balance Sheet Review
Inventories were up 6 percent compared with December 2013
levels. In 2014, VF’s cash generation from operations reached
nearly $1.7 billion and the company returned over $1.2 billion to
shareholders through dividends and share repurchases.
Adjusted Amounts – Excluding Noncash Impairment
Charge
As a result of our annual review of goodwill and intangible
assets, we recorded a $396 million pre-tax, noncash impairment
charge in the fourth quarter of 2014 to reduce the carrying value
of the goodwill and intangible assets related to our 7 For All
Mankind®, Ella Moss® and Splendid® brands. On an after-tax basis,
the charge totaled $307 million, which decreased fourth quarter and
full year 2014 earnings per share by $0.70. While management
continues to view these brands as compelling and complementary
within the context of VF’s portfolio, it concluded that an
impairment charge was required because the fair values of these
brands were below their respective carrying values. All “adjusted
amounts” referenced herein exclude the effects of this noncash
impairment charge. Reconciliations of GAAP measures to adjusted
amounts for 2014 are presented in the supplemental financial
information included with this release, which identify and quantify
all excluded items.
Currency Neutral – Excluding the Impact of Foreign
Currency
This release refers to “currency neutral”’ amounts. In 2014,
currency neutral amounts only exclude the impact of translating
foreign currencies into U.S. dollars. The net impact of foreign
currency fluctuations on non-U.S. dollar denominated transactions
in 2014 was not material compared to 2013. Reconciliations of GAAP
measures to currency neutral amounts for 2014 are presented in the
supplemental financial information included with this release,
which identify and quantify all excluded items.
Currency neutral amounts for 2015 exclude both the expected
impact of translating foreign currencies into U.S. dollars and the
expected impact of foreign currency rate changes on non-U.S. dollar
denominated transactions. The “transactional” impact from foreign
currency fluctuations is considered in 2015 currency neutral
amounts due to the recent and rapid strengthening of the U.S.
dollar. This release also refers to “reported” amounts in 2015,
which include translation and transactional impacts from foreign
currency based on current estimates of foreign currency exchange
rates.
2015 Outlook
“2015 will be another great year for VF. Our fundamentals have
never been stronger and despite the strength of the U.S. dollar,
which will continue to pressure our reported results, we expect
meaningful growth in every region around the world,” Wiseman
continued. “Our consistent and proven, powerful-brand,
powerful-platform approach to business gives me tremendous
confidence in our ability to further increase competitive
separation for our brands and provide sustainable, long-term
returns for our shareholders.”
Key points related to VF’s full year 2015 outlook include:
- Revenue is expected to increase
by 8 percent on a currency neutral basis (up 3 percent reported).
Revenues for the Outdoor & Action Sports coalition,
including The North Face®, Vans® and Timberland® brands, are
expected to increase at a low double-digit percentage rate currency
neutral (up mid single-digit reported). Imagewear and
Sportswear coalition revenues are expected to grow at a mid
single-digit rate. Jeanswear is expected to grow at a low
single-digit rate and Contemporary Brands revenues are
expected to be nearly flat on a currency neutral basis (down at a
mid single-digit reported rate).
- International revenues are
expected to increase at a low double-digit rate on a currency
neutral basis (up low single-digit reported). Revenues for Europe,
which represents less than a quarter of VF’s total sales, are
expected to be up at a high single-digit rate currency neutral
(down at a mid single-digit rate reported). In the Asia Pacific
region, which is about 10 percent of VF’s total sales, full year
revenues are expected to increase at a mid to high-teen percentage
rate. And in the Americas (non-U.S.) region, which is a little more
than 5 percent of VF’s total sales, revenues are expected to be up
at a mid-teen percentage rate currency neutral (up mid single-digit
reported). International revenues should approximate 37 percent of
total revenues in 2015.
- Direct-to-consumer revenues are
expected to grow at a mid-teen percentage rate currency neutral (up
at a low double-digit percentage rate reported) in 2015 and should
represent about 28 percent of total VF revenues. Direct-to-consumer
growth in 2015 will be driven by approximately 150 store openings,
comp store growth and an expected increase of more than 30 percent
in e-commerce revenues.
- Gross margin is expected to
improve by 40 basis points to reach 49.2 percent, which includes a
30 basis point headwind from changes in foreign currency.
- Operating margin is expected to
reach 15.0 percent, including the negative impact of changes in
foreign currency.
- Earnings per share, on a
currency neutral basis, is expected to increase 12 percent (up 4%
reported) compared to an adjusted EPS of $3.08 in 2014.
- Cash flow from operations should
reach $1.3 billion. The year over year comparison is impacted by a
$250 million contribution to fully fund the company’s U.S. pension
plan made in the first quarter of 2015, the significant cash
received in the 53rd week of 2014 and the negative impact of
changes in foreign currency.
- VF expects to spend approximately $700
million under the company’s share repurchase program; when
combined with the annual dividend, this will return more
than $1.2 billion to shareholders in 2015.
- Other full year assumptions include a
24 percent effective tax rate and capital
expenditures of approximately $225 million.
In terms of revenue comparisons in 2015, on a currency neutral
basis, we expect relatively consistent growth comparisons
quarter-by-quarter throughout the year. Due to the rapid
strengthening of the U.S. dollar in the second half of 2014,
reported revenue comparisons in the second half of 2015 will be
slightly stronger than in the first half.
In terms of earnings cadence in 2015, the negative impact of
currency movements is more pronounced in the first half of the
year, especially in the first quarter when foreign currencies in
2014 were at their strongest level against the U.S. dollar and our
international business mix is particularly high.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.32
per share, payable on March 20, 2015 to shareholders of record on
March 10, 2015.
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) 240-9334 (domestic) or (913) 312-0381 (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. 13 through Feb. 20, 2015, via telephone at
877-870-5176 (access code: 9238359) or at www.vfc.com.
About VF
VF Corporation (NYSE: VFC) is a global leader in the design,
manufacture, marketing and distribution of branded lifestyle
apparel, footwear and accessories. The company’s highly diversified
portfolio of 30 powerful brands spans numerous geographies, product
categories, consumer demographics and sales channels, giving VF a
unique industry position and the ability to create sustainable,
long-term growth for our customers and shareholders. The company’s
largest brands are The North Face®, Vans®, Timberland®,
Wrangler®, Lee® and Nautica®. For more information,
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 demand for apparel,
footwear and accessories; disruption to VF’s distribution system;
VF's reliance on a small number of large customers; the financial
strength of VF's customers; VF's ability to implement its growth
strategy; VF's ability to grow its international and
direct-to-consumer businesses; VF and its customers’ ability to
maintain the strength and security of information technology
systems; stability of VF's manufacturing facilities and foreign
suppliers; continued use by VF's suppliers of ethical business
practices; VF's ability to protect trademarks and other
intellectual property rights; possible goodwill and other asset
impairment; 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
Condensed Consolidated Statements of
Income
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended December %
Twelve Months Ended December % 2014
2013 Change 2014 2013 Change
Net sales $ 3,544,263 $ 3,258,712 9% $ 12,154,784 $
11,302,350 8%
Royalty income 34,597 31,387 10%
127,377 117,298 9%
Total revenues
3,578,860 3,290,099 9% 12,282,161
11,419,648 8%
Costs and operating expenses Cost of
goods sold 1,823,625 1,704,690 7% 6,288,190 5,931,469 6% Selling,
general and administrative expenses 1,177,229 1,077,027 9%
4,159,885 3,841,032 8% Impairment of goodwill and intangible assets
396,362 - 396,362 - 3,397,216
2,781,717 22% 10,844,437 9,772,501 11%
Operating income 181,644 508,382 (64%) 1,437,724 1,647,147
(13%) Interest, net (19,986) (19,408) (3%) (79,814) (80,632)
1% Other income (expense), net (1,335) (2,302) 42%
(5,544) (4,025) (38%)
Income before income
taxes 160,323 486,672 (67%) 1,352,366 1,562,490 (13%)
Income taxes 38,222 119,005 (68%)
304,861 352,371 (13%)
Net income $ 122,101 $
367,667 (67%) $ 1,047,505 $ 1,210,119 (13%)
Earnings per
common share Basic $ 0.28 $ 0.84 (66%) $ 2.42 $ 2.76 (12%)
Diluted $ 0.28 $ 0.82 (66%) $ 2.38 $ 2.71 (12%)
Weighted
average shares outstanding Basic 431,645 439,023 432,611
438,657 Diluted 439,695 447,746 440,153 446,809
Cash
dividends per common share $ 0.3200 $ 0.2625 22% $ 1.1075 $
0.9150 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 the period ended
December 2014 relate to the 14 week and 53 week fiscal periods
ended January 3, 2015, and all references to the period ended
December 2013 relate to the 13 week and 52 week fiscal periods
ended December 28, 2013.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
December December 2014
2013 ASSETS Current assets Cash and
equivalents $ 971,895 $ 776,403 Accounts receivable, net 1,276,224
1,360,443 Inventories 1,482,804 1,399,062 Other current assets
454,931 347,074 Total current assets 4,185,854
3,882,982
Property, plant and equipment 942,181
932,792
Intangible assets 2,433,552 2,960,201
Goodwill 1,824,956 2,021,750
Other assets
593,597 517,718 Total assets $ 9,980,140 $ 10,315,443
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Short-term borrowings $ 21,822 $ 18,810 Current
portion of long-term debt 3,975 5,167 Accounts payable 690,842
638,732 Accrued liabilities 903,602 905,292 Total
current liabilities 1,620,241 1,568,001
Long-term
debt 1,423,581 1,426,829
Other liabilities 1,305,436
1,243,575
Stockholders' equity 5,630,882
6,077,038 Total liabilities and stockholders' equity $
9,980,140 $ 10,315,443
VF CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended December 2014
2013 Operating activities Net
income $ 1,047,505 $ 1,210,119 Impairment of goodwill and
intangible assets 396,362 - Depreciation and amortization 274,883
253,273 Other noncash adjustments to net income 18,299 76,708
Changes in operating assets and liabilities (39,420 )
(34,059 ) Cash provided by operating activities 1,697,629 1,506,041
Investing activities Capital expenditures (234,077 )
(271,153 ) Software purchases (67,943 ) (53,989 ) Other, net
(27,235 ) (25,131 ) Cash used by investing activities
(329,255 ) (350,273 )
Financing activities Net
increase in short-term borrowings 4,761 9,032 Payments on long-term
debt (4,760 ) (404,872 ) Purchases of treasury stock (727,795 )
(282,024 ) Cash dividends paid (478,933 ) (402,136 ) Net impact of
stock issuance 99,306 96,169 Cash used
by financing activities (1,107,421 ) (983,831 )
Effect of
foreign currency rate changes on cash and equivalents
(65,461 ) 7,005
Net change in cash and
equivalents 195,492 178,942
Cash and equivalents -
beginning of year 776,403 597,461
Cash and equivalents - end of year $ 971,895 $
776,403
VF CORPORATION
Supplemental Financial
Information
Business Segment Information
(Unaudited)
(In thousands)
Three Months Ended December %
Twelve Months Ended December % 2014
2013 Change 2014 2013 Change
Coalition revenues Outdoor & Action Sports $
2,164,324 $ 1,919,322 13% $ 7,198,994 $ 6,379,167 13% Jeanswear
755,140 734,075 3% 2,801,754 2,810,994 0% Imagewear 298,305 286,888
4% 1,104,038 1,065,952 4% Sportswear 215,154 207,774 4% 650,203
624,693 4% Contemporary Brands 106,694 107,714 (1%) 400,431 415,053
(4%) Other 39,243 34,326 14% 126,741
123,789 2% Total coalition revenues $ 3,578,860 $ 3,290,099
9% $ 12,282,161 $ 11,419,648 8%
Coalition
profit Outdoor & Action Sports $ 432,345 $ 358,247 21% $
1,312,963 $ 1,106,384 19% Jeanswear 141,571 134,331 5% 527,972
544,882 (3%) Imagewear 48,408 44,860 8% 164,352 152,203 8%
Sportswear 32,171 35,676 (10%) 77,972 88,157 (12%) Contemporary
Brands 1,809 8,915 (80%) 23,420 38,825 (40%) Other (603)
1,633 (137%) (2,600) (562) (363%) Total
coalition profit 655,701 583,662 12% 2,104,079 1,929,889 9%
Impairment of goodwill and intangible assets (396,362) -
(396,362) -
Corporate and other expenses (79,030) (77,582)
(2%) (275,537) (286,767) 4%
Interest, net (19,986)
(19,408) (3%) (79,814) (80,632) 1%
Income before income taxes $ 160,323 $ 486,672 (67%) $
1,352,366 $ 1,562,490 (13%)
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Currency
Neutral Basis
(Unaudited)
(In thousands)
Three Months Ended December 2014 Exclude As
Reported Impact of Foreign under GAAP Currency
Exchange Currency Neutral Coalition
revenues Outdoor & Action Sports $ 2,164,324 $ (65,371 ) $
2,229,695 Jeanswear 755,140 (17,956 ) 773,096 Imagewear 298,305
(1,611 ) 299,916 Sportswear 215,154 - 215,154 Contemporary Brands
106,694 (2,285 ) 108,979 Other 39,243 -
39,243 Total coalition revenues $ 3,578,860
$ (87,223 ) $ 3,666,083
Coalition
profit Outdoor & Action Sports $ 432,345 $ (12,979 ) $
445,324 Jeanswear 141,571 (155 ) 141,726 Imagewear 48,408 (285 )
48,693 Sportswear 32,171 - 32,171 Contemporary Brands 1,809 (32 )
1,841 Other (603 ) - (603 )
Total coalition profit 655,701 (13,451 ) 669,152
Impairment of goodwill and intangible assets (396,362 ) -
(396,362 )
Corporate and other expenses (79,030 ) - (79,030
)
Interest, net (19,986 ) -
(19,986 )
Income before income taxes $ 160,323
$ (13,451 ) $ 173,774
Currency Neutral 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 currency
neutral financial information, which is a non-GAAP financial
measure. We use currency neutral 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 currency
neutral 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 currency neutral 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 currency neutral information presented may not be comparable to
similarly titled measures reported by other companies.
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Currency
Neutral Basis
(Unaudited)
(In thousands)
Twelve Months Ended December 2014 Exclude
As Reported Impact of Foreign under GAAP
Currency Exchange Currency Neutral
Coalition revenues Outdoor & Action Sports $ 7,198,994
(43,075 ) $ 7,242,069 Jeanswear 2,801,754 (43,013 ) 2,844,767
Imagewear 1,104,038 (4,267 ) 1,108,305 Sportswear 650,203 - 650,203
Contemporary Brands 400,431 (250 ) 400,681 Other 126,741
- 126,741 Total coalition
revenues $ 12,282,161 $ (90,605 ) $ 12,372,766
Coalition profit Outdoor & Action Sports $ 1,312,963 $
(12,446 ) $ 1,325,409 Jeanswear 527,972 (151 ) 528,123 Imagewear
164,352 (877 ) 165,229 Sportswear 77,972 - 77,972 Contemporary
Brands 23,420 82 23,338 Other (2,600 ) -
(2,600 ) Total coalition profit 2,104,079 (13,392 )
2,117,471
Impairment of goodwill and intangible
assets (396,362 ) - (396,362 )
Corporate and other
expenses (275,537 ) - (275,537 )
Interest, net
(79,814 ) - (79,814 )
Income before
income taxes $ 1,352,366 $ (13,392 ) $ 1,365,758
Currency Neutral 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 currency neutral financial
information, which is a non-GAAP financial measure. We use currency
neutral 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 currency neutral 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 currency neutral 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
currency neutral 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 2014 Margin December 2013
Margin Operating income, as reported
under GAAP $ 181,644 5.1% $ 508,382 15.5% Impairment of
goodwill and intangible assets 396,362 -
Operating
income, as adjusted $ 578,006 16.2%
$ 508,382
15.5%
Net income, as reported under GAAP $
122,101 $ 367,667 Impairment of goodwill and intangible
assets, net of tax 306,831 -
Net income, as adjusted
$ 428,932 $ 367,667 Diluted earnings
per share, as reported under GAAP $ 0.28 $ 0.82
Impairment of goodwill and intangible assets, net of tax 0.70 -
Diluted earnings per share, as adjusted $ 0.98 $ 0.82
Twelve Months Twelve Months
Ended Operating Ended Operating
December 2014 Margin December 2013
Margin Operating income, as reported
under GAAP $ 1,437,724 11.7% $ 1,647,147 14.4%
Impairment of goodwill and intangible assets 396,362 -
Operating income, as adjusted $ 1,834,086 14.9%
$
1,647,147 14.4%
Net income, as reported under
GAAP $ 1,047,505 $ 1,210,119 Impairment of goodwill and
intangible assets, net of tax 306,831 -
Net income, as
adjusted $ 1,354,336 $ 1,210,119
Diluted earnings per share, as reported under GAAP $ 2.38 $
2.71 Impairment of goodwill and intangible assets, net of
tax 0.70 -
Diluted earnings per share, as adjusted $
3.08 $ 2.71
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 noncash impairment charges for goodwill and intangible assets.
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 CorporationLance Allega, 336-424-6082Vice President, Investor
RelationsorCraig Hodges, 336-424-5636Director, Public Relations
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