- 2015 revenue up 1 percent to $12.4
billion (up 6 percent currency neutral); excluding changes in
foreign currency and last year’s 53rd week, 2015
revenue increased 7 percent;
- 2015 EPS was up 20 percent to $2.85
from $2.38 per share in 2014; adjusted EPS, which excludes noncash
impairment charges in both 2015 and 2014, was flat at $3.08 (up 12
percent currency neutral);
- 2016 revenue expected to increase at
a mid single-digit percentage rate;
- 2016 gross margin expected to
approximate 48.8 percent, net of an anticipated 70 basis points of
negative impact from changes in foreign currency;
- 2016 currency neutral EPS expected
to increase 11 percent (up 5 percent reported) compared to adjusted
EPS of $3.08 in 2015; and,
- Expected to return $1.5 billion to
shareholders in 2016 through share repurchases and
dividends.
VF Corporation (NYSE: VFC) today reported financial results for
its fourth quarter and full year ended January 2, 2016. All per
share amounts are on a diluted basis. This release refers to
amounts as “reported”, “currency neutral” and “adjusted.” Currency
neutral and adjusted amounts are non-GAAP financial measures
described below under the “Currency Neutral – Excluding the Impact
of Foreign Currency” and “Adjusted Amounts – Excluding Noncash
Impairment Charges” paragraphs, respectively. Unless otherwise
noted, currency neutral and reported amounts are the same. This
release also refers to the impact of the 53rd week of 2014, as
described under the “52/53 Week Fiscal Year” paragraph.
“The final quarter of 2015 challenged many companies to leverage
core strengths and adapt quickly to a changing landscape,” said
Eric Wiseman, VF Chairman and Chief Executive Officer. “Our focus,
discipline and agility amid a softer consumer environment, record
warm weather and a strengthening U.S. dollar have us well
positioned to navigate what we believe to be a relatively
short-term challenge. Going forward, I remain confident in VF’s
ability to deliver continued long-term profitable growth and value
creation for our shareholders.”
“Our full year 2015 was also affected by many of the same
challenges we saw in the fourth quarter, including a tough
comparison against 2014’s 53rd week,” continued Wiseman. “In fact,
when normalized over 2014 and 2015, currency neutral revenue grew 7
percent and earnings grew 13 percent annually over this period, in
line with our long-term earnings growth target.”
Fourth Quarter 2015 Review
- Revenue was down 5 percent (down
1 percent currency neutral). Excluding the impact of changes in
foreign currency and the 53rd week, fourth quarter revenue
increased 3 percent.
- Gross margin was 49.0 percent on
a currency neutral basis, in line with last year. Reported gross
margin was down 70 basis points to 48.3 percent as benefits from
more favorable product costs and continued mix shift to higher
margin businesses were offset by foreign currency headwinds and
aggressive efforts to manage inventory.
- A $144 million pre-tax, noncash
impairment charge ($0.23 per share after tax) was recorded to
reduce the carrying value of intangible assets related to our 7 For
All Mankind®, Ella Moss® and Splendid® brands.
- Operating income, on an adjusted
basis, declined 6 percent to $541 million in the fourth quarter. On
a GAAP basis, fourth quarter operating income was $397 million.
Adjusted operating margin reached 15.8 percent, net of 70
basis points of foreign currency headwinds, compared with 16.2
percent in the fourth quarter of 2014. On a GAAP basis, fourth
quarter operating margin was 11.6 percent compared with 5.1 percent
in last year’s same period.
- Adjusted earnings per share was
$0.95 per share compared with $0.98 per share during the same
period last year. Excluding the negative impact of foreign
currency, fourth quarter adjusted earnings per share was up 5
percent. On a GAAP basis, earnings per share was up 157 percent to
$0.72.
The following table provides comparisons of changes in reported,
currency neutral, and currency neutral excluding the 53rd week
revenue growth rates for the fourth quarter of 2015.
Q4 2015
% Change
Reported
% Change
Currency
Neutral
% Change Currency
Neutral & Excluding
53rd Week
Coalition Revenue Outdoor & Action Sports
(3 %) 1 % 5 % Jeanswear (2 %) 1 % 6 % Imagewear (13 %) (12 %) (7 %)
Sportswear (9 %) (9 %) (6 %) Contemporary Brands (19 %) (17
%) (10 %)
Total Coalition Revenue (5 %)
(1 %) 3 %
Full Year 2015 Review
- Revenue increased 1 percent (up
6 percent currency neutral) to $12.4 billion driven by strength in
our Outdoor & Action Sports coalition, and our international
and direct-to-consumer platforms. For comparison purposes,
excluding the impact of changes in foreign currency and the 53rd
week, full year revenue increased 7 percent.
- Gross margin on a currency
neutral basis improved 30 basis points to 49.1 percent. Reported
gross margin was 48.3 percent, compared with 48.8 percent in 2014.
For the full year, a continued shift in our revenue mix toward
higher-margin businesses and more favorable product costs was more
than offset by an 80 basis point negative impact from changes in
foreign currency and aggressive efforts to manage inventory.
- Operating income on an adjusted
basis was $1.8 billion, in line with 2014. On a GAAP basis, full
year operating income was $1.7 billion. Adjusted operating
margin was 14.6 percent in 2015, net of 70 basis points of
foreign currency headwinds, compared with 14.9 percent in 2014. On
a GAAP basis, operating margin was 13.4 percent in 2015 compared
with 11.7 percent in 2014.
- Adjusted earnings per share was
in line with 2014 adjusted EPS of $3.08 per share (up 12 percent
currency neutral). On a GAAP basis, full year earnings per share
was $2.85, an increase of 20 percent compared with 2014.
The following table provides comparisons of changes in reported,
currency neutral, and currency neutral excluding the 53rd week
revenue growth rates for the full year 2015.
2015 % Change
Reported
% Change
Currency
Neutral
% Change Currency
Neutral & Excluding
53rd Week
Coalition Revenue Outdoor & Action Sports
3 % 9 % 11 % Jeanswear 0 % 4 % 5 % Imagewear (2 %) (1 %) 0 %
Sportswear (2 %) (2 %) (1 %) Contemporary Brands (14 %) (11
%) (9 %)
Total Coalition Revenue 1 %
6 % 7 %
Coalition Review
Fourth quarter revenue for the Outdoor & Action
Sports coalition was down 3 percent (up 1 percent currency
neutral) to $2.1 billion. Full year Outdoor & Action Sports
revenue increased 3 percent in 2015 (up 9 percent currency neutral)
to $7.4 billion. Excluding the negative impact of foreign currency
and the 53rd week, fourth quarter and full year revenue increased 5
percent and 11 percent, respectively.
Fourth quarter revenue for The North Face® brand was down 4
percent (down 2 percent currency neutral) impacted significantly by
record warm weather. Excluding the negative impact of foreign
currency and the 53rd week, fourth quarter revenue for The North
Face® brand was up 1 percent. By region, The North Face® brand’s
revenue was down at a low-single digit percentage rate in the
Americas, down at a low-teen percentage rate in Europe (down mid
single-digit currency neutral), and down at a low-single digit
percentage rate in Asia Pacific (up low single-digit currency
neutral). For the full year, revenue for The North Face® brand grew
1 percent (up 5 percent currency neutral) to $2.3 billion.
Excluding the negative impact of foreign currency and the 53rd
week, 2015 revenue for The North Face® brand grew 6 percent.
Revenue for the Vans® brand in the fourth quarter was up 3
percent (up 8 percent currency neutral). Excluding the negative
impact of foreign currency and the 53rd week, fourth quarter
revenue for the Vans® brand increased 13 percent. Revenue in the
Americas region was up at a low single-digit percentage rate in the
quarter (up mid single-digit currency neutral), up more than 20
percent in the Asia Pacific region and down at a mid single-digit
rate (up high single-digit currency neutral) in Europe. Revenue for
the Vans® brand for the full year was up 7 percent (up 14 percent
currency neutral) to reach $2.2 billion. Excluding the negative
impact of foreign currency and the 53rd week, 2015 revenue for the
Vans® brand was up 16 percent.
Timberland® brand revenue was down 4 percent (up 1 percent
currency neutral) in the fourth quarter impacted significantly by
record warm weather. Excluding the negative impact of foreign
currency and the 53rd week, fourth quarter revenue for the
Timberland® brand grew 5 percent. In the Americas region, revenue
was down at a low single-digit rate and in Europe, the Timberland®
brand was down at a high single-digit rate (up at a mid
single-digit rate currency neutral). In Asia Pacific, fourth
quarter revenue was down at a mid single-digit percentage rate
(down low single-digit currency neutral). Full year Timberland®
brand revenue was up 2 percent to $1.8 billion, or an increase of
10 percent on a currency neutral basis. Excluding the negative
impact of foreign currency and the 53rd week, 2015 revenue for the
Timberland® brand increased 12 percent.
Fourth quarter operating income for Outdoor & Action Sports
declined 11 percent to $386 million (down 5 percent currency
neutral). Operating margin was 18.4 percent in the quarter and 17.1
percent for the full year.
Jeanswear fourth quarter revenue was down 2 percent (up 1
percent currency neutral) to $737 million. Excluding the negative
impact of foreign currency and the 53rd week, fourth quarter
revenue for Jeanswear was up 6 percent. Revenue for the Americas
region was down at a low single-digit rate (flat currency neutral).
In Europe, revenue was down at a low double-digit percentage rate
(up low single-digit currency neutral) and in Asia, revenue was up
at a mid single-digit rate (up low double-digit currency neutral).
In 2015, global Jeanswear revenue was flat at $2.8 billion (up 4
percent currency neutral).
Fourth quarter revenue for the Wrangler® brand was down 4
percent (down 1 percent currency neutral) with mid single-digit
growth in the U.S. mass channel offset by weakness in the western
specialty business. Wrangler® brand revenue in Europe was down at a
low-teen percentage rate (down low single-digit currency neutral)
and up at a high single-digit rate (up low double-digit currency
neutral) in Asia Pacific. Full year revenue for the Wrangler® brand
was unchanged on a reported basis, or up 4 percent currency neutral
to reach $1.7 billion.
Revenue for the Lee® brand in the fourth quarter was in line
with last year’s same period (up 5 percent currency neutral)
including low single-digit growth in the Americas region, a mid
single-digit percentage increase in Asia Pacific (up low
double-digit currency neutral) and a high single-digit decline in
Europe (up mid single-digit currency neutral). For the full year,
reported revenue for the Lee® brand was consistent with 2014, or up
5 percent on a currency neutral basis.
Operating income for Jeanswear in the fourth quarter was down 1
percent to $141 million (up 9 percent currency neutral). Operating
margin increased 40 basis points to 19.1 percent in the quarter,
and was up 40 basis points for the full year to 19.2 percent.
Imagewear revenue was down 13 percent (down 12 percent
currency neutral) in the fourth quarter to $259 million with low
single-digit growth in the Licensed Sports Group business offset by
more than 20 percent lower revenue in the workwear business due
primarily to the impact of considerably lower oil and gas
exploration. Excluding the negative impact of foreign currency and
the 53rd week, fourth quarter revenue for Imagewear was down 7
percent. For the full year, revenue for the Imagewear coalition was
down 2 percent (down 1 percent currency neutral) to $1.1
billion.
Fourth quarter operating income for Imagewear was down 19
percent to $39 million, with a 100 basis point decline in operating
margin to 15.2 percent. For the full year, Imagewear operating
margin was 14.6 percent, a 30 basis point decline over 2014.
Sportswear fourth quarter revenue decreased 9 percent to
$196 million. Nautica® brand revenue was down at a low double-digit
percentage rate and the Kipling® brand’s U.S. business was up at a
low single-digit percentage rate compared with the same period last
year. Excluding the negative impact of foreign currency and the
53rd week, fourth quarter revenue for Sportswear was down 6
percent. For the year, Sportswear coalition revenue was down 2
percent to $635 million.
In the fourth quarter, operating income decreased 12 percent to
$28 million with a 50 basis point decrease in operating margin to
14.5 percent. 2015 operating margin for the Sportswear coalition
improved 40 basis points to 12.4 percent, reflecting ongoing
efforts to elevate the Nautica® brand’s business model.
Contemporary Brands coalition fourth quarter revenue was
down 19 percent (down 17 percent currency neutral) to $86 million.
Excluding the negative impact of foreign currency and the 53rd
week, fourth quarter revenue for Contemporary Brands was down 10
percent. For the full year, Contemporary Brands coalition revenue
was down 14 percent (down 11 percent currency neutral) to $344
million.
International Review
International revenue in the fourth quarter was down 6 percent
(up 4 percent currency neutral). Excluding the negative impact of
foreign currency and the 53rd week, fourth quarter international
revenue was up 7 percent. Revenue in Europe was down 9 percent (up
2 percent currency neutral) and in the Asia Pacific region was up 3
percent (up 8 percent currency neutral). Revenue in the Americas
(non-U.S.) region was down 8 percent (up 7 percent currency
neutral). International revenue was 33 percent of total VF fourth
quarter sales, the same ratio as 2014. For the full year,
international revenue represented 36 percent of total VF sales,
compared with 38 percent in 2014.
Direct-to-Consumer Review
Direct-to-consumer revenue was down 1 percent (up 3 percent
currency neutral) in the fourth quarter, a result negatively
impacted by record warm weather and a sluggish economic
environment. Excluding the negative impact of foreign currency and
the 53rd week, fourth quarter direct-to-consumer revenue was up 11
percent. There were 1,520 VF owned retail stores at the end of
2015. Direct-to-consumer revenue reached 34 percent of total
revenue in the fourth quarter compared with 32 percent in the 2014
period. For the full year, direct-to-consumer revenue was 27
percent of total VF revenue compared with 26 percent in 2014.
Balance Sheet Review
Inventories were up 9 percent compared with December 2014 levels
with more than half of the increase directly attributable to cold
weather products. In 2015, VF’s cash generation from operations
reached $1.1 billion and the company returned nearly $1.3 billion
to shareholders through dividends and share repurchases.
Adjusted Amounts – Excluding Noncash Impairment
Charges
As a result of our annual review of intangible assets, we
recorded a $144 million pre-tax, noncash impairment charge in the
fourth quarter of 2015 to reduce the carrying value of intangible
assets related to our 7 For All Mankind®, Ella Moss® and Splendid®
brands. On an after-tax basis, the charge totaled $97 million,
which decreased fourth quarter and full year 2015 earnings per
share by $0.23.
In 2014, we recorded a $396 million pre-tax, noncash impairment
charge in the fourth quarter to reduce the carrying value of
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.
All “adjusted amounts” referenced herein exclude the effects of
these noncash impairment charges. Reconciliations of measures in
accordance with U.S. generally accepted accounting principles
(“GAAP”) to adjusted amounts 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 for the fourth
quarter and full year 2015, and 2016 outlook. Currency neutral
amounts exclude both the impact of
translating foreign currencies into U.S. dollars and the impact of
currency rate changes on foreign currency denominated transactions.
This release also refers to “reported” amounts in accordance with
GAAP, which include translation and
transactional impacts from foreign currency exchange rates.
Reconciliations of GAAP measures to currency neutral amounts for
the fourth quarter and full year 2015 are presented in the attached
supplemental financial information, which identify and quantify all
excluded items.
52/53 Week Fiscal Year
VF operates and reports using a 52/53 week fiscal year ending on
the Saturday closest to December 31 of each year, and as a result,
a 53rd week is added every five or six years. VF’s 2014 fiscal
year included a 53rd week, which was the week ended January 3,
2015. Similarly, while fiscal quarters normally consist of 13-week
periods, the fourth quarter of 2014 included a 14th week. For
comparability between 2015 and 2014 financial results, certain
estimates referenced herein exclude the impact of the 53rd week of
2014, which added approximately 1 percent of revenue growth.
2016 Outlook
“Going forward, we believe the current environment provides a
significant opportunity for VF. With history as our teacher, we
know that powerful brands and companies with strong balance sheets
can capitalize on environments like this. That is exactly our
intention,” continued Wiseman. “By focusing on our strengths –
driving innovation into the marketplace, telling great stories to
connect with consumers and operating with financial discipline – we
will seize this opportunity to complete 2016 better positioned than
we ever have been.”
Key points related to VF’s full year 2016 outlook include:
- Revenue is expected to increase
at a mid single-digit percentage rate, including about one
percentage point of negative impact from changes in foreign
currency. By coalition, revenue for Outdoor & Action
Sports is expected to increase at a high single-digit
percentage rate; mid single-digit growth for Jeanswear; low
single-digit growth for Imagewear; a slight decline in
Sportswear; and, a mid single-digit decline in the
Contemporary Brands business.
- International revenue is
expected to increase at a high single-digit rate on a currency
neutral basis (up mid single-digit reported). European revenue is
expected to be up at a mid single-digit rate currency neutral (up
low single-digit rate reported). In the Asia Pacific region, full
year currency neutral revenue is expected to increase at a low
double-digit percentage rate (up high single-digit reported). And
in the Americas (non-U.S.) region, revenue is expected to be up at
a low-teen percentage rate currency neutral (up low single-digit
reported).
- Direct-to-consumer revenue is
expected to grow at a low double-digit percentage rate, including
about a point of negative impact from changes in foreign currency.
Direct-to-consumer growth in 2016 will be driven by an increase of
approximately 80 stores and comparable sales growth including an
expected increase of more than 20 percent in e-commerce
revenue.
- Gross margin is expected to
improve by about 50 basis points to 48.8 percent, which includes
about 70 basis points of headwind from changes in foreign
currency.
- Operating margin is expected to
reach 14.4 percent, including about 70 basis points from the
anticipated negative impact of changes in foreign currency.
- Earnings per share, on a
currency neutral basis, is expected to increase 11 percent (up 5
percent reported) compared to an adjusted EPS of $3.08 in
2015.
- Cash flow from operations is
expected to reach $1.3 billion.
- VF expects to spend approximately $1
billion under the company’s share repurchase program. This
represents a more than 35 percent increase over repurchases made in
2015, and when combined with the annual dividend, should
return $1.5 billion to shareholders in 2016.
- Other full year assumptions include an
approximate 23 percent effective tax rate and capital
expenditures of approximately $300 million.
In the first quarter of 2016, we expect currency neutral revenue
and earnings per share to be about flat. On a reported basis,
revenue in the first quarter is expected to be about flat and
earnings per share is expected to be down at a low double-digit
percentage rate. In the second quarter of 2016, revenue should
increase at a low single-digit percentage rate with a low
single-digit decline in currency neutral earnings per share, or
down high single-digit as reported. The second quarter of 2015
benefitted from a lower tax rate related to the settlement of prior
years’ tax audits. Currency neutral revenue growth in the second
half of 2016 should increase at a high single-digit percentage
rate, with the strongest performance coming in the fourth quarter.
We expect second half earnings per share to increase at a mid to
high-teen percentage rate.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.37
per share, payable on March 18, 2016 to shareholders of record on
March 8, 2016.
Webcast Information
VF will hold its 2015 fourth quarter conference call and webcast
today at approximately 8:30 a.m. Eastern Time. Interested parties
should call (888) 820-9418 (U.S.) or (913) 312-9323 (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 through Feb. 26, 2016 at the same location or via
telephone at 877-870-5176 (access code: 1884533).
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 business
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; volatile and unpredictable weather patterns; 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. 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 % 2015
2014 Change 2015 2014
Change Net sales $ 3,380,160 $ 3,544,263 (5 %)
$ 12,250,678 $ 12,154,784 1 %
Royalty income 32,603
34,597 (6 %) 126,066
127,377 (1 %)
Total revenues 3,412,763
3,578,860 (5 %) 12,376,744
12,282,161 1 %
Costs and operating
expenses Cost of goods sold 1,763,297 1,823,625 (3 %) 6,393,800
6,288,190 2 % Selling, general and administrative expenses
1,108,698 1,177,229 (6 %) 4,178,386 4,159,885 - Impairment of
goodwill and intangible assets 143,562 396,362
(64 %) 143,562 396,362 (64 %)
3,015,557 3,397,216 (11 %)
10,715,748 10,844,437 (1 %)
Operating income 397,206 181,644 119 % 1,660,996 1,437,724
16 % Interest, net (20,565 ) (19,986 ) 3 % (82,262 ) (79,814
) 3 % Other income (expense), net 1,437 (1,335
) 208 % 1,655 (5,544 ) 130 %
Income
before income taxes 378,078 160,323 136 % 1,580,389 1,352,366
17 %
Income taxes 65,869 38,222
72 % 348,796 304,861 14 %
Net income $ 312,209 $ 122,101 156 % $
1,231,593 $ 1,047,505 18 %
Earnings per
common share Basic $ 0.73 $ 0.28
161
% $ 2.90 $ 2.42 20 % Diluted $ 0.72 $ 0.28 157 % $ 2.85 $ 2.38 20 %
Weighted average shares outstanding Basic 425,814
431,645 425,408 432,611 Diluted 432,036 439,695 432,079 440,153
Cash dividends per common share $ 0.3700 $ 0.3200 16
% $ 1.3300 $ 1.1075 20 %
Basis of presentation of
condensed consolidated financial statements: VF operates and
reports using a 52/53 week fiscal year ending on the Saturday
closest to December 31 of each year. For presentation purposes
herein, all references to the period ended December 2015 relate to
the 13-week and 52-week fiscal periods ended January 2, 2016, and
all references to the period ended December 2014 relate to the
14-week and 53-week fiscal periods ended January 3, 2015.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
December December 2015
2014 ASSETS Current assets Cash and
equivalents $ 945,605 $ 971,895 Accounts receivable, net 1,319,558
1,276,224 Inventories 1,611,994 1,482,804 Other current assets
285,979 300,646 Total current assets 4,163,136
4,031,569
Property, plant and equipment 988,159
942,181
Intangible assets 2,112,619 2,433,552
Goodwill 1,788,407 1,824,956
Other assets
587,221 613,042 Total assets $ 9,639,542 $ 9,845,300
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Short-term borrowings $ 449,590 $ 21,822 Current
portion of long-term debt 13,279 3,975 Accounts payable 689,594
690,842 Accrued liabilities 789,250 897,426 Total
current liabilities 1,941,713 1,614,065
Long-term
debt 1,401,820 1,413,847
Other liabilities 911,171
1,186,506
Stockholders' equity 5,384,838
5,630,882 Total liabilities and stockholders' equity $
9,639,542 $ 9,845,300
VF CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended December 2015
2014 Operating activities
Net income $ 1,231,593 $ 1,047,505 Impairment of goodwill and
intangible assets 143,562 396,362 Depreciation and amortization
272,075 274,883 Other noncash adjustments to net income (150,979 )
18,299 Changes in operating assets and liabilities (349,741
) (39,420 ) Cash provided by operating activities 1,146,510
1,697,629
Investing activities Capital expenditures
(254,501 ) (234,077 ) Software purchases (63,283 ) (67,943 ) Other,
net (5,038 ) (27,235 ) Cash used by investing
activities (322,822 ) (329,255 )
Financing activities
Net increase in short-term borrowings 432,262 4,761 Payments on
long-term debt (3,975 ) (4,760 ) Payments of debt issuance costs
(1,475 ) - Purchases of treasury stock (732,623 ) (727,795 ) Cash
dividends paid (565,275 ) (478,933 ) Net impact of stock issuance
87,791 99,306 Cash used by financing
activities (783,295 ) (1,107,421 )
Effect of foreign
currency rate changes on cash and equivalents (66,683 )
(65,461 )
Net change in cash and equivalents
(26,290 ) 195,492
Cash and equivalents - beginning of
year 971,895 776,403
Cash
and equivalents - end of year $ 945,605 $ 971,895
VF CORPORATION
Supplemental Financial
Information
Business Segment Information
(Unaudited)
(In thousands)
% Change
Currency
Neutral**
% Change
Currency
Neutral**
Three Months Ended December % Twelve Months Ended
December % 2015 2014
Change 2015 2014
Change Coalition revenues Outdoor &
Action Sports $ 2,100,662 $ 2,164,324 (3 %) 1 % $ 7,400,446 $
7,198,994 3 % 9 % Jeanswear 736,519 755,140 (2 %) 1 % 2,792,244
2,801,754 - 4 % Imagewear 259,341 298,305 (13 %) (12 %) 1,082,565
1,104,038 (2 %) (1 %) Sportswear 195,511 215,154 (9 %) (9 %)
635,056 650,203 (2 %) (2 %) Contemporary Brands 86,484 106,694 (19
%) (17 %) 344,089 400,431 (14 %) (11 %) Other 34,246
39,243 (13 %) (13 %) 122,344
126,741 (3 %) (3 %) Total coalition revenues $
3,412,763 $ 3,578,860 (5 %) (1 %) $ 12,376,744
$ 12,282,161 1 % 6 %
Coalition profit
Outdoor & Action Sports $ 385,723 $ 432,345 (11 %) (5 %) $
1,266,763 $ 1,312,963 (4 %) 7 % Jeanswear 140,641 141,571 (1 %) 9 %
535,385 527,972 1 % 7 % Imagewear 39,332 48,408 (19 %) (15 %)
157,959 164,352 (4 %) - Sportswear 28,411 32,171 (12 %) (12 %)
78,879 77,972 1 % 1 % Contemporary Brands 901 1,809 (50 %) (1 %)
5,845 23,420 (75 %) (64 %) Other (343 ) (603 ) * *
15,135 (2,600 ) * * Total coalition
profit 594,665 655,701 (9 %) (3 %) 2,059,966 2,104,079 (2 %) 7 %
Impairment of goodwill and intangible assets (143,562
) (396,362 ) (64 %) (64 %) (143,562 ) (396,362 ) (64 %) (64 %)
Corporate and other expenses (52,460 ) (79,030 ) (34 %) (34
%) (253,753 ) (275,537 ) (8 %) (8 %)
Interest, net
(20,565 ) (19,986 ) 3 % 3 % (82,262 ) (79,814
) 3 % 3 %
Income before income taxes $ 378,078
$ 160,323 136 % 163 % $ 1,580,389 $ 1,352,366
17 % 31 % * Calculation not meaningful **Refer to currency
neutral definition on following page
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Currency
Neutral Basis
(Unaudited)
(In thousands)
Three Months Ended December 2015
As Reported Adjust for Foreign under GAAP
Currency Exchange Currency Neutral
Coalition revenues Outdoor & Action Sports $ 2,100,662 $
88,721 $ 2,189,383 Jeanswear 736,519 23,764 760,283 Imagewear
259,341 2,797 262,138 Sportswear 195,511 - 195,511 Contemporary
Brands 86,484 2,354 88,838 Other 34,246 -
34,246 Total coalition revenues $
3,412,763 $ 117,636 $ 3,530,399
Coalition profit Outdoor & Action Sports $ 385,723 $
26,070 $ 411,793 Jeanswear 140,641 14,079 154,720 Imagewear 39,332
1,820 41,152 Sportswear 28,411 - 28,411 Contemporary Brands 901 892
1,793 Other (343 ) - (343 )
Total coalition profit 594,665 42,861 637,526
Impairment
of goodwill and intangible assets (143,562 ) - (143,562 )
Corporate and other expenses (52,460 ) (23 ) (52,483 )
Interest, net (20,565 ) -
(20,565 )
Income before income taxes $ 378,078
$ 42,838 $ 420,916
Diluted earnings per share
growth
157%
29%
186%
Currency Neutral Financial
Information
VF is a global company that reports
financial information in U.S. dollars in accordance with
GAAP. Foreign currency exchange rate fluctuations affect
the amounts reported by VF from translating its foreign revenues
and expenses into U.S. dollars, and from entering foreign currency
transactions. 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 that excludes
the incremental current year impact of foreign currency exchange.
We use currency neutral information to provide a framework to
assess how our business performed excluding the effects of changes
in the rates used to calculate foreign currency translation and
transaction gains and losses. Management believes this information
is useful to investors to facilitate comparison of operating
results and better identify trends in our businesses.
To calculate foreign currency translation
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). Similarly, transaction gains and losses on a currency
neutral basis are calculated using exchange rates from the
comparable period of the prior
year.
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)
Twelve Months Ended December 2015 As
Reported Adjust for Foreign under GAAP
Currency Exchange Currency Neutral
Coalition revenues Outdoor & Action Sports $ 7,400,446 $
470,565 $ 7,871,011 Jeanswear 2,792,244 111,336 2,903,580 Imagewear
1,082,565 9,797 1,092,362 Sportswear 635,056 - 635,056 Contemporary
Brands 344,089 13,398 357,487 Other 122,344 -
122,344 Total coalition revenues $
12,376,744 $ 605,096 $ 12,981,840
Coalition profit Outdoor & Action Sports $ 1,266,763 $
143,604 $ 1,410,367 Jeanswear 535,385 32,118 567,503 Imagewear
157,959 5,818 163,777 Sportswear 78,879 - 78,879 Contemporary
Brands 5,845 2,494 8,339 Other 15,135 -
15,135 Total coalition profit 2,059,966
184,034 2,244,000
Impairment of goodwill and intangible
assets (143,562 ) - (143,562 )
Corporate and other
expenses (253,753 ) 881 (252,872 )
Interest, net
(82,262 ) - (82,262 )
Income before
income taxes $ 1,580,389 $ 184,915 $ 1,765,304
Diluted earnings per share growth
20%
15%
35%
Currency Neutral Financial Information
VF is a global company that reports
financial information in U.S. dollars in accordance with GAAP.
Foreign currency exchange rate fluctuations affect the amounts
reported by VF from translating its foreign revenues and expenses
into U.S. dollars, and from entering foreign currency transactions.
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 that excludes the incremental
current year impact of foreign currency exchange. We use currency
neutral information to provide a framework to assess how our
business performed excluding the effects of changes in the rates
used to calculate foreign currency translation and transaction
gains and losses. Management believes this information is useful to
investors to facilitate comparison of operating results and better
identify trends in our businesses.
To calculate foreign currency translation
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). Similarly, transaction gains and losses on a currency
neutral basis are calculated using exchange rates from the
comparable period of the prior year.
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 2015
Margin December 2014 Margin
Operating Income, as reported under GAAP $ 397,206 11.6 % $
181,644 5.1 % Impairment of goodwill and intangible assets
143,562 396,362
Operating Income, as
adjusted $ 540,768 15.8 %
$ 578,006
16.2 %
Net Income, as reported under GAAP $
312,209 $ 122,101 Impairment of goodwill and intangible
assets 97,110 306,831
Net Income, as
adjusted $ 409,319 $ 428,932
Diluted earnings per share, as reported under GAAP $
0.72 $ 0.28 Impairment of goodwill and intangible assets
0.23 0.70
Diluted earnings per share, as
adjusted $ 0.95 $ 0.98
Twelve Months
Twelve Months Ended Operating Ended
Operating December 2015 Margin December
2014 Margin Operating Income, as
reported under GAAP $ 1,660,996 13.4 % $ 1,437,724 11.7 %
Impairment of goodwill and intangible assets 143,562
396,362
Operating Income, as adjusted $
1,804,558 14.6 %
$ 1,834,086 14.9 %
Net Income, as reported under GAAP $ 1,231,593 $
1,047,505 Impairment of goodwill and intangible assets
97,110 306,831
Net Income, as adjusted
$ 1,328,703 $ 1,354,336
Diluted earnings per share, as reported under GAAP $ 2.85 $
2.38 Impairment of goodwill and intangible assets
0.23 0.70
Diluted earnings per share, as
adjusted $ 3.08 $ 3.08
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 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160219005159/en/
VF CorporationLance AllegaV.P., Investor Relations &
Strategic Accounts336-424-6082orCraig HodgesDirector, Public
Relations336-424-5636
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