- Total revenue from continuing
operations down 1 percent to $3.5 billion;
- Outdoor & Action Sports revenue
up 2 percent to $2.3 billion;
- Direct-to-consumer revenue up 6
percent to $800 million;
- International revenue up 5 percent
to $1.4 billion (up 6 percent currency neutral);
- Gross margin up 70 basis points to
48.4 percent, including 60 basis points of negative impact from
changes in foreign currency;
- Earnings per share up 13 percent to
$1.20 (up 16 percent currency neutral);
- Inventories up 1 percent compared
with the same period of 2015; and,
- Quarterly dividend rate increased by
14 percent to $0.42 per share.
VF Corporation (NYSE: VFC) today reported financial results for
its third quarter ended October 1, 2016. All per share amounts are
presented on a diluted basis. This release refers to “reported” and
“currency neutral” amounts, terms that are described under the
“Currency Neutral – Excluding the Impact of Foreign Currency”
paragraph. Reconciliations of GAAP measures to currency neutral
amounts are presented in the supplemental financial information
included with this release, which identify and quantify all
excluded items. Unless otherwise noted, reported and currency
neutral amounts are the same. This release also refers to both
“continuing” and “discontinued” operations amounts, concepts that
are described under the “Discontinued Operations – Contemporary
Brands” paragraph. Unless otherwise noted, results presented are
based on continuing operations.
“We continue to operate in an uneven, global economic
environment including especially sluggish retail conditions in the
Americas, our largest market,” said Eric Wiseman, VF Chairman and
Chief Executive Officer. “With a strong balance sheet, powerful
brands, and a growing global presence, we have great confidence in
our ability to maintain near-term profitability, yet we’re not
satisfied with our third quarter results. We remain sharply focused
on operational improvements and taking advantage of this
environment to accelerate strategies to create sustainable,
long-term growth opportunities for our brands.”
Discontinued Operations – Contemporary Brands
On August 26, 2016, the company completed the sale of its
Contemporary Brands businesses, which included the 7 For All
Mankind®, Splendid® and Ella Moss® brands, to Delta Galil
Industries, Ltd. Accordingly, the company removed the assets and
liabilities of the Contemporary Brands businesses as of that date
and included the results of those businesses in discontinued
operations for all periods presented.
The company’s net loss from discontinued operations was about $5
million in the third quarter of 2016, which includes both the final
adjustment to the loss on the sale of the Contemporary Brands
businesses and the operating results for the businesses during the
quarter, net of tax.
Income Statement Review
- Revenue was down 1 percent to
$3.5 billion.
- Gross margin was up 70 basis
points to 48.4 percent on a reported basis, as benefits from
pricing, mix and lower product costs were partially offset by
changes in foreign currency and inventory management efforts.
Changes in foreign currency negatively impacted reported gross
margin by 60 basis points in the quarter.
- Operating income on a reported
basis was down 1 percent to $635 million compared with the same
period of 2015. Operating margin on a reported basis increased 10
basis points to 18.2 percent. Changes in foreign currency
negatively impacted reported operating margin by 40 basis points in
the quarter.
- Earnings per share was up 13
percent to $1.20 compared with $1.06 during the same period last
year. Excluding the impact of foreign currency, third quarter
earnings per share was up 16 percent. The quarter benefitted from a
lower tax rate due to a higher mix of international sales and about
$0.06 per share due to net tax discrete items relative to
2015.
Coalition Review
Third quarter revenue for Outdoor & Action Sports was
up 2 percent to $2.3 billion.
- Revenue for The North Face® brand was
down 1 percent (flat currency neutral) in the quarter including a
mid-single-digit rate decline in the Americas; a more than 20
percent increase in Europe; and, a mid-single-digit percentage rate
decline in Asia-Pacific (down low single-digit currency
neutral).
- Vans® brand revenue was up 7 percent
(up 8 percent currency neutral) driven by a high single-digit
percentage rate increase in the Americas business (up 10 percent
currency neutral); a low single-digit rate decline in Europe; and
more than 20 percent growth in Asia-Pacific.
- Timberland® brand revenue was in line
with last year’s third quarter (down 1 percent currency neutral)
including a mid-single-digit percentage rate decrease in the
Americas region; a mid-single-digit percentage rate increase in
Europe (up low single-digit currency neutral); and, a low
single-digit rate decline in Asia-Pacific.
Third quarter operating income for Outdoor & Action Sports
was up 1 percent to $490 million (up 3 percent currency neutral).
Operating margin was 21.0 percent, compared to 21.2 percent in the
same period last year.
Jeanswear third quarter revenue declined 6 percent (down
4 percent currency neutral) to $701 million due to unseasonably
warm weather in September, softer consumer demand and shifts in the
delivery of orders.
- Wrangler® brand revenue was down 6
percent (down 4 percent currency neutral) with a high single-digit
percentage rate decline in the Americas business (down
mid-single-digit currency neutral); a mid-single-digit percentage
rate increase in Europe; and, a high single-digit increase in the
Asia-Pacific region (up low double-digit currency neutral).
- Revenue for the Lee® brand was down 6
percent (down 4 percent currency neutral) including a high
single-digit percentage rate decline in the Americas region; a
mid-single-digit percentage rate increase in Europe; and, a high
single-digit percentage rate decline in the Asia-Pacific region
(down low single-digit currency neutral).
Operating income for Jeanswear in the third quarter declined 10
percent to $142 million and operating margin was 20.3 percent,
compared to 21.2 percent in the same period last year.
Imagewear third quarter revenue declined 3 percent to
$282 million (down 4 percent currency neutral) with a low
single-digit percentage rate increase in the Licensed Sports Group
business and a high single-digit decline in the workwear business,
which continues to be impacted by challenges in the oil and gas
exploration sector and employment trends in industrial
manufacturing. Third quarter operating income for Imagewear was up
11 percent (up 8 percent currency neutral) to $47 million and
operating margin increased 230 basis points to 16.6 percent.
Sportswear third quarter revenue declined 13 percent to
$141 million including a 15 percent decrease in Nautica® brand
revenue and a 6 percent decline in the Kipling® brand’s North
American business compared with the same period last year. These
results reflect ongoing challenges in the U.S. department store and
outlet channels, and general category demand. Additionally, the
strategic decision to license the women’s sleepwear and men’s
underwear businesses negatively impacted Nautica® brand revenue by
about 8 percentage points in the quarter. Operating income for
Sportswear decreased 35 percent to $15 million with operating
margin at 10.7 percent, compared to 14.3 percent in the same period
last year.
International Review
International revenue in the third quarter was up 5 percent (up
6 percent currency neutral). Revenue in Europe was up 7 percent (up
6 percent currency neutral) and up 2 percent (up 4 percent currency
neutral) in the Asia-Pacific region. Revenue in the Americas
(non-U.S.) region was up 3 percent (up 9 percent currency neutral).
The international business represented 41 percent of total VF third
quarter sales, compared with 38 percent in last year’s same
period.
Direct-to-Consumer Review
Direct-to-consumer revenue was up 6 percent in the third quarter
driven by a low double-digit percentage rate increase in the
Outdoor & Action Sports business offset by a low-teen decline
in Sportswear. The company’s e-Commerce business continued its
strong momentum with 18 percent revenue growth. There were 1,475
VF-owned retail stores at the end of the quarter compared with
1,363 for last year’s same period. Direct-to-consumer revenue
reached 23 percent of total third quarter revenue compared with 21
percent in last year’s same period.
Balance Sheet Highlights
On September 20, 2016, the company issued €850 million of senior
notes to be used for working capital and general corporate
purposes, including repayment of outstanding indebtedness under its
existing commercial paper program. As expected, inventories were up
1% compared with the same period of 2015.
Share Repurchases
During the third quarter, the company purchased 2.7 million
shares of its own stock for $166 million under a program authorized
by its Board of Directors. In 2016, the company has purchased
nearly 16 million shares for $1 billion. There are approximately 15
million remaining shares authorized for purchase.
2016 Outlook
Following is the adjusted outlook for 2016:
- Revenue, on a currency neutral
basis, is expected to increase 2 percent to about $12.2 billion
compared to the previous estimate of 3 to 4 percent growth. Revenue
for the Outdoor & Action Sports coalition is now
expected to increase at a low single-digit percentage rate compared
with previous expectation of mid-single-digit growth due primarily
to proactive inventory reductions by both The North Face® and
Timberland® brands related to fourth quarter wholesale orders.
Revenue for the Jeanswear coalition is now expected to
increase at a low single-digit percentage rate compared with
previous expectation of mid-single-digit growth.
Direct-to-Consumer revenue is now expected to increase at a
high single-digit percentage rate compared with previous
expectation of low double-digit growth.
- Gross margin is expected to
reach 48.6 percent, which includes about 70 basis points of
headwind from changes in foreign currency.
- Operating margin is now expected
to reach 14.3 percent, including about 60 basis points of negative
impact from changes in foreign currency. This is 20 basis points
lower than the previous 14.5 percent estimate.
- Reported earnings per share is
expected to increase 3 percent to $3.13 (up 7 percent currency
neutral) compared with previous expectation of a 5 percent increase
to $3.20 (up 11 percent currency neutral). This is compared to EPS
from continuing operations of $3.04 in 2015 as presented in the
financial tables below.
- Other full-year assumptions include an
approximate 20 percent effective tax rate. The expectation
of $1.3 billion of cash flow from operations remains
unchanged.
Dividend Declared
On October 20, VF’s Board of Directors declared a quarterly
dividend of $0.42 per share, reflecting a 14 percent increase over
the previous quarter’s dividend. This dividend will be payable on
December 19, 2016, to shareholders of record at the close of
business on December 9, 2016.
Currency Neutral – Excluding the Impact of Foreign
Currency
This release refers to “reported” amounts in accordance with
U.S. generally accepted accounting principles (“GAAP”), which
include translation and transactional
impacts from foreign currency exchange rates. This release also
refers to “currency neutral” amounts, which exclude both the impact of translating foreign
currencies into U.S. dollars and the impact of currency rate
changes on foreign currency denominated transactions.
Reconciliations of GAAP measures to currency neutral amounts are
presented in the supplemental financial information included with
this release, which identify and quantify all excluded items.
Webcast Information
VF will host its 2016 third quarter conference call beginning at
approximately 8:30 a.m. Eastern Time today. The conference call
will be broadcast live via the Internet, accessible at ir.vfc.com.
For those unable to listen to the live broadcast, an archived
version will be available at the same location.
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 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 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: foreign currency fluctuations; 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;
fluctuations in the price, availability and quality of raw
materials and contracted products; disruption and volatility in the
global capital and credit markets; VF's response to changing
fashion trends; increasing pressure on margins; VF's ability to
implement its business strategy; VF's ability to grow its
international and direct-to-consumer businesses; VF’s and its
customers’ and vendors’ 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
accurately forecast demand for products; continuity of members of
VF’s management; VF's ability to protect trademarks and other
intellectual property rights; possible goodwill and other asset
impairment; maintenance by VF’s licensees and distributors of the
value of VF’s brands; changes in tax liabilities; legal,
regulatory, political and economic risks; and adverse or unexpected
weather conditions. 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 September % Nine
Months Ended September %
Year EndedDecember
2016a 2015 Change 2016a
2015 Change 2015b Net
sales $ 3,457,570 $ 3,500,569 (1 %) $ 8,611,419 $ 8,614,974 0 %
$ 11,909,635
Royalty income 30,656
29,057 6 % 87,010 91,402 (5 %)
123,020
Total revenues 3,488,226
3,529,626 (1 %) 8,698,429
8,706,376 0 %
12,032,655
Costs and operating expenses Cost
of goods sold 1,800,748 1,844,441 (2 %) 4,505,930 4,513,331 0 %
6,235,699 Selling, general and administrative expenses
1,052,050 1,045,622 1 % 3,013,394
2,943,153 2 % 4,009,029 Total
costs and operating expenses 2,852,798
2,890,063 (1 %) 7,519,324 7,456,484
1 % 10,244,728
Operating income
635,428 639,563 (1 %) 1,179,105 1,249,892 (6 %)
1,787,927
Interest, net (22,588 ) (20,657 ) 9 %
(64,056 ) (61,214 ) 5 % (81,620 )
Other income (expense),
net (1,097 ) (1,278 ) (14 %) 1,696
217 * 1,028
Income before
income taxes 611,743 617,628 (1 %) 1,116,745 1,188,895 (6 %)
1,707,335
Income taxes 108,709
159,993 (32 %) 208,551 280,293
(26
%)
392,204
Income from continuing
operations 503,034 457,635 10 % 908,194 908,602 0 % 1,315,131
Income (loss) from discontinued
operations, net of tax
(4,545 ) 2,229 * (98,421 )
10,782 * (83,538 )
Net income $ 498,489
$ 459,864 8 % $ 809,773 $ 919,384
(12
%)
$
1,231,593
Earnings per common share - Basic
Continuing operations $ 1.22 $ 1.08 13 % $ 2.18 $ 2.14 2 %
$
3.09 Discontinued operations (0.01 ) - *
(0.24 ) 0.02 * (0.19 )
Total
earnings per common share - Basic $ 1.21 $ 1.08 12 % $ 1.94 $
2.16
(10
%)
$ 2.90
Earnings per common share - Diluted Continuing
operations $ 1.20 $ 1.06 13 % $ 2.14 $ 2.10 2 % $ 3.04 Discontinued
operations (0.01 ) 0.01 * (0.23 )
0.03 * (0.19 )
Total earnings per common
share - Diluted $ 1.19 $ 1.07 11 % $ 1.91 $ 2.13
(10
%)
$ 2.85
Weighted average shares outstanding Basic
413,461 425,208 417,067 425,273 425,408 Diluted 419,240 431,460
423,477 432,091 432,079
Cash dividends per common
share $ 0.37 $ 0.32 16 % $ 1.11 $ 0.96 16 % $ 1.33
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 periods ended
September 2016, December 2015 and September 2015 relate to the
13-week and 39-week fiscal periods ended October 1, 2016, the
52-week fiscal period ended January 2, 2016 and the 13-week and
39-week fiscal periods ended October 3, 2015, respectively.
* Calculation not meaningful
a Reflects the impact of
adopting the new accounting guidance on stock compensation as of
the beginning of the first quarter of 2016, which resulted in an
$8.9 million and $26.5 million tax benefit in the Consolidated
Statements of Income for the three and nine months ended September
2016, respectively.
b The 2015 Consolidated Statement
of Income has been presented to reflect discontinued operations of
the Contemporary Brands Coalition.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
September December September
2016 2015 2015a ASSETS
Current assets Cash and equivalents $ 737,825 $ 944,423 $
567,637 Accounts receivable, net 1,785,289 1,289,962 1,840,673
Inventories 1,999,996 1,555,360 1,971,790 Other current assets
295,913 284,215 291,419 Current assets of discontinued operations
- 89,176 100,363 Total current assets
4,819,023 4,163,136 4,771,882
Property, plant and
equipment 949,312 945,491 935,068
Intangible assets
1,970,788 1,948,611 2,001,010
Goodwill 1,798,474 1,788,407
1,800,008
Other assets 905,512 583,866 646,892
Other
assets of discontinued operations - 210,031
358,252
Total assets $ 10,443,109 $ 9,639,542 $
10,513,112
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Short-term borrowings $ 737,660 $
449,590 $ 1,285,388 Current portion of long-term debt 3,643 3,351
3,214 Accounts payable 565,745 680,606 571,448 Accrued liabilities
870,148 782,148 890,574 Current liabilities of discontinued
operations - 26,018 26,904 Total current
liabilities 2,177,196 1,941,713 2,777,528
Long-term
debt 2,347,122 1,401,820 1,401,058
Other liabilities
1,046,014 900,256 962,083
Other liabilities of discontinued
operations - 10,915 11,246
Total
liabilities 5,570,332 4,254,704 5,151,915
Stockholders' equity 4,872,777 5,384,838
5,361,197
Total liabilities and stockholders' equity
$ 10,443,109 $ 9,639,542 $ 10,513,112
a Reflects the
impact of adopting the new accounting guidance on classification of
debt issuance costs and deferred income taxes as of December 2015
on a retrospective basis. The new guidance requires classification
of debt issuance costs related to a recognized debt liability as a
direct reduction of that liability, and classification of all
deferred taxes as noncurrent.
VF CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 2016
2015a Operating
activities Net income $ 809,773 $ 919,384 Depreciation and
amortization 205,491 198,304 Other adjustments (971,896 )
(1,397,899 ) Cash provided (used) by operating activities
43,368 (280,211 )
Investing activities Capital
expenditures (129,947 ) (187,281 ) Proceeds from sale of business,
net of cash sold 115,983 - Software purchases (31,843 ) (53,053 )
Other, net (4,997 ) 3,150 Cash used by
investing activities (50,804 ) (237,184 )
Financing
activities Net increase in short-term borrowings 287,759
1,268,146 Payments on long-term debt (12,385 ) (3,163 ) Payments of
debt issuance costs (6,772 ) (1,475 ) Proceeds from long-term debt
951,782 - Purchases of treasury stock (1,000,231 ) (731,936 ) Cash
dividends paid (462,406 ) (407,684 ) Net impact of stock issuance
40,668 23,168 Cash (used) provided by
financing activities (201,585 ) 147,056
Effect of foreign
currency rate changes on cash and equivalents 1,241
(34,957 )
Net change in cash and
equivalents (207,780 ) (405,296 )
Cash and
equivalents - beginning of periodb 945,605
971,895
Cash and equivalents - end of
periodb $ 737,825 $ 566,599
a Reflects the impact of adopting the new accounting
guidance on stock compensation as of the beginning of the first
quarter of 2016, which resulted in a $50.8 million reclassification
of cash flows from financing activities to operating activities in
the Condensed Consolidated Statement of Cash Flows for the nine
months ended September 2015.
b The cash flows related
to discontinued operations have not been segregated, and are
included in the Condensed Consolidated Statement of Cash Flows. The
cash and equivalents amounts presented above differ from cash and
equivalents in the Condensed Consolidated Balance Sheets due to
cash included in the "Current assets of discontinued operations."
VF CORPORATION
Supplemental Financial
Information
Business Segment Information
(Unaudited)
(In thousands)
Three Months Ended September %
% ChangeCurrency
Nine Months Ended September %
% ChangeCurrency
2016 2015 Change
Neutral**
2016 2015 Change
Neutral**
Coalition revenues Outdoor & Action Sports $
2,335,993
$
2,296,551 2 % 2 % $ 5,399,916 $ 5,299,784 2 % 2 % Jeanswear 701,416
747,869 (6 %) (4 %) 2,041,186 2,055,725 (1 %) 1 % Imagewear 281,542
291,540 (3 %) (4 %) 805,892 823,224 (2 %) (2 %) Sportswear 140,705
161,697 (13 %) (13 %) 373,977 439,545 (15 %) (15 %) Other
28,570 31,969 (11 %) (11 %) 77,458
88,098 (12 %) (12 %) Total coalition
revenues $ 3,488,226 $ 3,529,626 (1 %) (1 %) $
8,698,429 $ 8,706,376 0 % 1 %
Coalition profit Outdoor & Action Sports $ 490,470 $
487,929 1 % 3 % $ 841,413 $ 883,674 (5 %) 1 % Jeanswear 142,427
158,603 (10 %) (9 %) 388,564 395,103 (2 %) (1 %) Imagewear 46,634
41,830 11 % 8 % 124,546 118,627 5 % 2 % Sportswear 15,080 23,194
(35 %) (35 %) 26,156 50,468 (48 %) (48 %) Other (272 )
354 * * (3,134 ) 15,478 * *
Total coalition profit 694,339 711,910 (2 %) (1 %) 1,377,545
1,463,350 (6 %) (2 %)
Corporate and other expenses
(60,008 ) (73,625 ) (18 %) (19 %) (196,744 ) (213,241 ) (8 %) (8 %)
Interest, net (22,588 ) (20,657 ) 9 % 9 %
(64,056 ) (61,214 ) 5 % 5 %
Income before
income taxes $ 611,743
$
617,628 (1 %) 1 % $ 1,116,745 $ 1,188,895 (6
%) (2 %) . * Calculation not meaningful **Refer to currency
neutral definition on the following pages.
VF CORPORATION
Supplemental Financial
Information
Business Segment Information – Currency
Neutral Basis
(Unaudited)
(In thousands)
Three Months Ended September 2016 As
Reported Adjust for Foreign under GAAP
Currency Exchange Currency Neutral
Coalition revenues Outdoor & Action Sports $ 2,335,993 $
(3,798 ) $ 2,332,195 Jeanswear 701,416 13,213 714,629 Imagewear
281,542 (559 ) 280,983 Sportswear 140,705 - 140,705 Other
28,570 - 28,570 Total
coalition revenues $ 3,488,226 $ 8,856 $ 3,497,082
Coalition profit Outdoor & Action Sports $
490,470 $ 13,918 $ 504,388 Jeanswear 142,427 1,321 143,748
Imagewear 46,634 (1,262 ) 45,372 Sportswear 15,080 - 15,080 Other
(272 ) - (272 ) Total coalition
profit 694,339 13,977 708,316
Corporate and other
expenses (60,008 ) 19 (59,989 )
Interest, net
(22,588 ) - (22,588 )
Income before
income taxes $ 611,743 $ 13,996 $ 625,739
Diluted earnings per share growth 13 % 3 %
16 %
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
Business Segment Information – Currency
Neutral Basis
(Unaudited)
(In thousands)
Nine Months Ended September 2016 As
Reported Adjust for Foreign under GAAP
Currency Exchange Currency Neutral
Coalition revenues Outdoor & Action Sports $ 5,399,916 $
22,612 $ 5,422,528 Jeanswear 2,041,186 45,263 2,086,449 Imagewear
805,892 327 806,219 Sportswear 373,977 - 373,977 Other
77,458 - 77,458 Total
coalition revenues $ 8,698,429 $ 68,202 $ 8,766,631
Coalition profit Outdoor & Action Sports $
841,413 $ 51,911 $ 893,324 Jeanswear 388,564 4,016 392,580
Imagewear 124,546 (4,080 ) 120,466 Sportswear 26,156 - 26,156 Other
(3,134 ) - (3,134 ) Total
coalition profit 1,377,545 51,847 1,429,392
Corporate and
other expenses (196,744 ) (152 ) (196,896 )
Interest,
net (64,056 ) - (64,056 )
Income before income taxes $ 1,116,745 $ 51,695
$ 1,168,440
Diluted earnings per share growth
2 % 5 % 7 %
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20161024005377/en/
VF Corporation
Contacts:Lance Allega, 336-424-6082VP, Investor
Relations & Strategic AccountsorCraig Hodges,
336-424-5636Senior Director, Corporate Communications
VF (NYSE:VFC)
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