VF Announces Third Quarter Results and Increases Dividend

http://www.businesswire.com/news/home/20091026006247/en

* Full year earnings guidance moved to higher end of range
* 3Q revenues decline 5%; 3% in constant dollars
* 3Q EPS of $1.94 includes $.17 per share impact from higher pension expense and
currency rates
* 3Q gross margin of 44.3% near record levels
* Higher 2009 cash flow from operations: could reach $800 million
* Raising quarterly dividend payment for 37th consecutive year

Information regarding VF`s third quarter conference call webcast today at 4:30
p.m. ET can be found at the end of this release.
GREENSBORO, N.C.--(Business Wire)--
VF Corporation (NYSE:VFC), a global leader in branded lifestyle apparel, today
announced results for the third quarter of 2009. All per share amounts are
presented on a diluted basis.

Third quarter revenues were $2,093.8 million, a decline of 5% compared with
$2,206.6 million in the third quarter of 2008, with foreign currency translation
accounting for two percentage points of the decline. Net income in the current
quarter was $217.9 million compared with $233.9 million in the prior year`s
quarter. Earnings per share declined to $1.94 from $2.10. The current year
included a $.17 per share combined impact from higher pension expense and
foreign currency translation of $.11 and $.06 per share, respectively. Also
impacting the comparison was a $.07 per share benefit from unusual items in last
year`s third quarter.

For the first nine months of 2009, revenues were $5,304.9 million, down 7% from
$5,730.5 million in the prior year period. Foreign currency translation
accounted for three percentage points of the decline. Net income and earnings
per share both declined 19% to $394.4 million and $3.54 respectively. A majority
of the earnings per share decline was due to higher pension expense and foreign
currency translation impacts of $.36 and $.19 per share, respectively, which
together accounted for $.55 of the $.83 per share reduction.

"We achieved an important improvement in our third quarter performance relative
to the first half of the year as conditions have stabilized, giving us the
confidence to move our earnings guidance toward the higher end of our prior
range," said Eric C. Wiseman, Chairman, President and Chief Executive Officer.
"Our relentless drive to control costs, reduce inventories and focus investments
on our highest return opportunities has served us very well during these
difficult and volatile times. We will continue this disciplined approach through
the balance of this year and into 2010 to maximize opportunities for both top
and bottom line growth."

He continued, "Our four largest brands - Wrangler®, Lee®, The North Face® and
Vans®, representing approximately 60% of our total revenues - are strong and
healthy, and continue to gain share in most markets. And, we were pleased that
our fifth largest brand, Nautica®, grew revenues and achieved a significant
improvement in profitability in the quarter with a return to double-digit
margins."

He added, "We are also pleased to announce a 2% increase in our quarterly
dividend, to $.60 per share, which will mark 2009 as the 37th consecutive year
of higher dividend payments to shareholders. Strong cash generation has enabled
us to continue to build on our long-established track record of increasing our
dividend and returning superior value to our shareholders."

Third Quarter Business Review

Outdoor and Action Sports

Third quarter revenues in our Outdoor and Action Sports coalition were about
even with the prior year, with operating income and margins each reaching record
levels in the period. On a constant currency basis, revenues rose 3%. Global
revenues of The North Face® and Vans® brands grew 10% and 4%, respectively, in
the quarter on a constant currency basis. Total coalition revenues in our
Americas businesses rose 1%, while international revenues were up 4% in constant
dollars, led by exceptionally strong growth in Asia. Total direct-to-consumer
revenues for our Outdoor and Action Sports coalition rose 17% in the quarter,
with double-digit growth in our The North Face®, Vans® and Napapijri®brands.

Operating income rose with margins reaching a record 23.1% in the quarter, with
continued expansion in gross margins.

Revenue growth should accelerate in the fourth quarter primarily due to an
increase in our owned retail store business, as well as more favorable foreign
currency translation rates. In addition, operating margins should continue to
expand in the quarter compared with the prior year period.

Jeanswear

As anticipated, revenue comparisons in our global Jeanswear business improved in
the third quarter versus the second. On a constant currency basis, revenues were
down 7% in the third quarter compared with a 12% decline in the second quarter.
The improvement is especially evident in our domestic business, which was down
6% in the third quarter compared with a decline of 12% in the second quarter. We
continued to grow market share in our Wrangler® men`s and our Lee® men`s and
women`s jeans and casuals businesses in the U.S. Total coalition revenues
declined 11% on a reported basis in the quarter.

International jeanswear revenues were down 10% on a constant currency basis in
the quarter, reflecting continued difficult economic conditions across Europe.
Strong growth continued in Asia, where jeanswear revenues rose 17%.

Operating income declined in the quarter on lower revenues, while operating
margins improved to 16.7%.

Fourth quarter revenue comparisons are expected to improve over those of the
third quarter. Operating margins should be nearly double those of the prior
year`s quarter, reflecting strong gross margin expansion both domestically as
well as internationally. In addition, operating margins last year were impacted
by actions taken in that period to reduce costs.

Sportswear

Revenues of our Sportswear coalition, which includes our Nautica® brand and the
Kipling® brand in North America, grew 4% in the quarter - a significant
improvement compared with first half results. While the third quarter benefited
from a slight shift in Nautica®
brand wholesale shipments from the fourth quarter to the third, we
continue to expect better comparisons in the second half versus the first, with
a mid single-digit decline in total coalition revenues in the period.

Operating margins rebounded strongly in the quarter to 15.8%, reflecting
improved margins in our Nautica®brand wholesale business and aggressive cost and
inventory reduction actions. We continue to expect double-digit operating
margins for both the fourth quarter and the year.

Contemporary Brands

Revenues of our Contemporary Brands coalition, which consists of the 7 For All
Mankind®, lucy®, John Varvatos®, Splendid® and Ella Moss® brands increased 3%
(or 4% on a constant currency basis), with the acquisition of the Splendid® and
Ella Moss® brands contributing $20 million to revenues in the quarter. Weak
conditions in upper tier department and specialty stores continued in the U.S.,
resulting in a decline in 7 For All Mankind® global brand revenues in the
quarter. Despite the revenue challenge, the operating margin for our 7 For All
Mankind® brand for the year should be well above VF`s overall long-term target
of 15%.

We expect much stronger revenue and operating income comparisons in the fourth
quarter, with better top line performance in our 7 For All Mankind® brand
resulting from new store openings and continued growth in our international
business. The addition of the Splendid® and Ella Moss® brands will also continue
to benefit both revenues and operating margins. We remain confident coalition
operating margins will return to strong double-digit levels in the fourth
quarter.

Imagewear

Imagewear coalition revenues fell 15% in the quarter, with comparable declines
in both our Image and Licensed Sports businesses. Our Image business has been
impacted this year by high levels of unemployment in key sectors affecting our
industrial and protective apparel businesses. Licensed Sports revenues have been
impacted by lower attendance at sporting events as well as the overall economic
environment which has led to reduced sales of highly discretionary products such
as team sports apparel.

Operating income and margins declined reflecting the lower volumes, particularly
those in our industrial and protective apparel businesses where profitability
levels are higher than the coalition average.

While high unemployment levels will continue to impact Image revenues in the
fourth quarter, our customer relationships remain strong and we are well
positioned to capitalize on new business opportunities when economic conditions
improve. We also expect easier comparisons in our Licensed Sports business in
the fourth quarter. The coalition`s operating margin is expected to be
relatively stable in the quarter compared with the prior year period.

VF`s gross margins remained near record levels for the period, and were 44.3%
compared with 44.4% in last year`s third quarter. Despite a 100 basis point
impact from higher pension expense, operating margins declined only slightly, to
15.2% in the quarter from 15.9% in the prior year period.

International and Direct-to-Consumer

Continued growth in our international and direct-to-consumer businesses remain
key long-term drivers of both organic growth and margin expansion. During the
quarter, international revenues declined 2% on a constant currency basis due to
weak market conditions affecting our European jeanswear business in particular.
However, on a constant currency basis, international revenues of our Vans®and
The North Face® brands rose in the quarter. Our highly profitable Asian business
continued to grow strongly, with revenues up 32% in the quarter.

Our direct-to-consumer business increased 6% in the quarter, driven by strong
increases in our Vans®, The North Face®, 7 For All Mankind® and Napapijri®
brands. Our direct-to-consumer business represented 15% of VF`s total revenues
in the quarter, up nearly 2 percentage points from the prior year`s quarter.
Operating margins of this business also expanded during the quarter, driven
primarily by our successful full-price retail formats. We opened a total of 23
stores across our brands in the quarter, bringing the number of owned retail
stores to 733 at the end of the quarter. Year-to-date, we have opened 59 stores,
and we now expect to open more than 80 stores in total this year.

Balance Sheet and Cash Flow

"A strong balance sheet and cash flow are VF hallmarks, and our focus on working
capital management has further enhanced our financial position in 2009," said
Mr. Wiseman. "We now expect that cash flow from operations could reach $800
million this year, versus our prior guidance of $750 million."

Cash and equivalents were $379 million and should exceed $600 million at
year-end assuming no additional acquisitions this year. Our inventory reduction
actions have resulted in a decline in inventories of 13% from September 2008
levels. By year-end, we expect inventories to also be down approximately 13%, or
$150 million, from year-end 2008 levels.

Outlook

"We are confident that VF has the right levers in place to drive long-term
shareholder value: a foundation of powerful brands with significant long-term
growth potential; expanding international and direct-to-consumer platforms that
will enhance our brands` reach to consumers while also driving higher margins;
and exceptionally strong cash flow that supports our solid dividend and
acquisition strategy," said Mr. Wiseman.

With three quarters of the year behind us, we are strengthening our full year
earnings guidance. We anticipate that 2009 revenues will be down about 6%, with
2% of the decline due to foreign currency translation. Earnings per share should
range between $4.85 and $5.00 versus $5.42 in 2008, including a negative impact
of approximately $.70 per share in 2009 from higher pension expense and currency
translation.

We expect stronger revenue comparisons in the fourth quarter, helped in part by
more favorable foreign currency translation rates. Earnings per share should be
up sharply over 2008 levels, as comparisons will benefit from our growing
direct-to-consumer business, operating efficiencies and the absence of the
restructuring actions that reduced last year`s fourth quarter earnings by $.30
per share. Foreign currency translation rates should be neutral to earnings in
the quarter, as the quarter is a seasonally lower period of profit contribution
from our international businesses. Higher pension expense should impact earnings
by $.12 per share.

Dividend Increased

The Board of Directors declared a quarterly cash dividend of $.60 per share, an
increase of $.01 per share. The dividend is payable on December 18, 2009 to
shareholders of record as of the close of business on December 8, 2009.

Constant Currency Financial Measures

This press release contains constant currency financial information, which is a
measure of financial performance that is not prepared in accordance with
generally accepted accounting principles ("GAAP"). An explanation of
management's use of this non-GAAP financial information is described in the
supplemental financial information on page 11.

Statement on Forward Looking Statements

Certain statements included in this release 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. 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 the overall level of consumer spending on apparel; disruption
and volatility in the global capital and credit markets; general economic
conditions and other factors affecting consumer confidence; VF's reliance on a
small number of large customers; the financial strength of VF's customers;
changing fashion trends and consumer demand; increasing pressure on margins;
VF's ability to implement its growth strategy; VF's ability to grow its
international and direct-to-consumer businesses; VF's ability to successfully
integrate and grow acquisitions; VF's ability to maintain the strength and
security of its 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; maintenance by VF's licensees and
distributors of the value of VF's brands; fluctuations in the price,
availability and quality of raw materials and contracted products; foreign
currency fluctuations; 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.

About VF

VF Corporation is a global leader in lifestyle apparel with a diverse portfolio
of jeanswear, outdoor, imagewear, sportswear and contemporary apparel brands.
Its principal brands include Wrangler®, Lee®, Riders®, The North Face®, Vans®,
Reef®, Eagle Creek®, Eastpak®, JanSport®, Napapijri®, Nautica®, Kipling®, John
Varvatos®, 7 For All Mankind®, lucy®, Splendid®, Ella Moss®, Majestic®and Red
Kap®.

VF Corporation's press releases, annual report and other information can be
accessed through the Company's home page, www.vfc.com.

Webcast Information

VF will hold its third quarter conference call and webcast today at 4:30 p.m.
ET. Interested parties should call 1-800-829-9048 domestic, or 1-913-312-1378
international, to access the call.You may also access this call via the Internet
at www.vfc.com.A replay will be available through November 2 and can be accessed
by dialing 1-888-203-1112 domestic, and 1-719-457-0820 international.The pass
code is2419147.A replay also can be accessed at the Company`s web site at
www.vfc.com.

VF CORPORATION
Consolidated Statements of Income
(In thousands, except per share amounts)

Three Months Ended September Nine Months Ended September

2009 2008 2009 2008

Net Sales $ 2,075,510 $ 2,185,825 $ 5,249,619 $ 5,669,503
Royalty Income 18,296 20,802 55,298 60,947

Total Revenues 2,093,806 2,206,627 5,304,917 5,730,450

Costs and Operating Expenses
Cost of goods sold 1,165,843 1,227,577 2,996,176 3,184,470
Marketing, administrative and general expenses 610,072 627,839 1,709,664 1,786,788
1,775,915 1,855,416 4,705,840 4,971,258

Operating Income 317,891 351,211 599,077 759,192

Other Income (Expense)
Interest income 420 1,435 1,750 4,696
Interest expense (21,325 ) (24,310 ) (65,159 ) (69,516 )
Miscellaneous, net 505 (1,677 ) 3,148 1,138
(20,400 ) (24,552 ) (60,261 ) (63,682 )

Income Before Income Taxes 297,491 326,659 538,816 695,510

Income Taxes 79,430 92,608 145,343 208,495

Net Income 218,061 234,051 393,473 487,015

Net (Income) Loss Attributable to Noncontrolling Interests inSubsidiaries
(141 ) (176 ) 913 (130 )

Net Income Attributable to VF Corporation $ 217,920 $ 233,875 $ 394,386 $ 486,885

Earnings Per Share Attributable to VF Corporation
Basic $ 1.97 $ 2.14 $ 3.57 $ 4.46
Diluted $ 1.94 $ 2.10 $ 3.54 $ 4.37

Weighted Average Shares Outstanding
Basic 110,881 109,106 110,372 109,062
Diluted 112,145 111,258 111,471 111,379

Cash Dividends Per Common Share $ 0.59 $ 0.58 $ 1.77 $ 1.74

Fiscal Periods: VF operates and reports using a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. Similarly, the fiscal third quarter ends on the Saturday closest to September 30. For presentation purposes herein, all references to periods ended September 2009, December 2008 and September 2008 relate to the fiscal periods ended as of October 3, 2009, January 3, 2009 and September 27, 2008, respectively.

VF CORPORATION
Consolidated Balance Sheets
(In thousands)

September December September
2009 2008 2008

ASSETS

Current Assets
Cash and equivalents $ 379,148 $ 381,844 $ 225,957
Accounts receivable, net 1,102,878 851,282 1,313,919
Inventories 1,171,151 1,151,895 1,341,842
Other current assets 275,556 267,989 222,669
Total current assets 2,928,733 2,653,010 3,104,387

Property, Plant and Equipment 1,586,713 1,557,634 1,582,337
Less accumulated depreciation 956,633 914,907 920,760
630,080 642,727 661,577

Intangible Assets 1,566,640 1,366,222 1,390,402

Goodwill 1,472,150 1,313,798 1,323,808

Other Assets 308,563 458,111 504,091

$ 6,906,166 $ 6,433,868 $ 6,984,265

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Short-term borrowings $ 252,175 $ 53,580 $ 413,469
Current portion of long-term debt 203,147 3,322 3,427
Accounts payable 362,010 435,381 418,712
Accrued liabilities 537,725 519,899 577,716
Total current liabilities 1,355,057 1,012,182 1,413,324

Long-term Debt 939,143 1,141,546 1,142,170

Other Liabilities 754,398 722,895 565,928

Commitments and Contingencies

Stockholders' Equity
Common Stock 110,814 109,848 109,827
Additional paid-in capital 1,842,147 1,749,464 1,747,775
Accumulated other comprehensive income (loss) (201,708) (276,294) 78,268
Retained earnings 2,105,758 1,972,874 1,925,132
Noncontrolling interests in subsidiaries 557 1,353 1,841

Total stockholders' equity 3,857,568 3,557,245 3,862,843

$ 6,906,166 $ 6,433,868 $ 6,984,265

VF CORPORATION
Consolidated Statements of Cash Flows
(In thousands)

Nine Months Ended September

2009 2008

Operating Activities
Net income $ 393,473 $ 487,015
Adjustments to reconcile net income to cash provided
by operating activities of continuing operations:

Depreciation 78,616 77,482
Amortization of intangible assets 29,953 29,781
Other amortization 12,346 9,862
Stock-based compensation 26,998 33,824
Pension funding over expense (35,420 ) (711 )
Other, net 80,601 11,090
Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable (237,209 ) (363,767 )
Inventories (1,945 ) (193,485 )
Other current assets (1,635 ) 10,929
Accounts payable (79,225 ) (93,990 )
Accrued compensation 17,128 (24,259 )
Accrued income taxes 3,598 36,373
Accrued liabilities 3,594 52,588
Other assets and liabilities (26,999 ) (12,929 )

Cash provided by operating activities of continuing operations 263,874 59,803

Cash used by discontinued operations - (1,002 )

Cash provided by operating activities 263,874 58,801

Investing Activities
Capital expenditures (57,746 ) (88,319 )
Business acquisitions, net of cash acquired (207,219 ) (93,377 )
Software purchases (9,349 ) (7,349 )
Sale of property, plant and equipment 6,050 5,851
Other, net (1,875 ) 1,020

Cash used by investing activities (270,139 ) (182,174 )

Financing Activities
Increase in short-term borrowings 196,799 281,340
Payments on long-term debt (2,582 ) (2,945 )
Purchase of Common Stock (52,988 ) (149,729 )
Cash dividends paid (195,550 ) (190,347 )
Proceeds from issuance of Common Stock, net 47,418 63,450
Tax benefits of stock option exercises 4,648 22,246
Other, net - (305 )

Cash provided (used) by financing activities (2,255 ) 23,710

Effect of Foreign Currency Rate Changes on Cash 5,824 3,757

Net Change in Cash and Equivalents (2,696 ) (95,906 )

Cash and Equivalents - Beginning of Year 381,844 321,863

Cash and Equivalents - End of Period $ 379,148 $ 225,957

VF CORPORATION
Supplemental Financial Information
Business Segment Information
(In thousands)

Three Months Ended September Nine Months Ended September

2009 2008 2009 2008

Coalition Revenues
Outdoor and Action Sports $ 904,625 $ 906,608 $ 2,021,095 $ 2,066,351
Jeanswear 664,801 743,180 1,877,605 2,101,635
Imagewear 221,246 260,099 643,203 748,384
Sportswear 149,050 143,672 356,935 398,256
Contemporary Brands 124,009 120,550 328,611 329,991
Other 30,075 32,518 77,468 85,833

Total coalition revenues $ 2,093,806 $ 2,206,627 $ 5,304,917 $ 5,730,450

Coalition Profit
Outdoor and Action Sports $ 209,051 $ 188,621 $ 364,310 $ 352,762
Jeanswear 110,782 122,868 266,699 323,499
Imagewear 19,521 40,757 61,476 104,529
Sportswear 23,576 15,491 35,003 32,078
Contemporary Brands 7,503 12,695 23,946 40,011
Other 912 (994 ) 283 (3,008 )

Total coalition profit 371,345 379,438 751,717 849,871

Corporate and Other Expenses (52,949 ) (29,904 ) (149,492 ) (89,541 )
Interest, net (20,905 ) (22,875 ) (63,409 ) (64,820 )

Income Before Income Taxes $ 297,491 $ 326,659 $ 538,816 $ 695,510

VF CORPORATION
Supplemental Financial Information
Business Segment Information - Constant Currency Basis
(In thousands)

Three Months Impact of Three Months
Ended Foreign Ended
September 2009 Currency September 2009
As Reported Exchange Constant Currency

Coalition Revenues
Outdoor and Action Sports $ 904,625 $ (25,887 ) $ 930,512
Jeanswear 664,801 (23,033 ) 687,834
Imagewear 221,246 73 221,173
Sportswear 149,050 - 149,050
Contemporary Brands 124,009 (882 ) 124,891
Other 30,075 - 30,075

Total coalition revenues $ 2,093,806 $ (49,729 ) $ 2,143,535

Coalition Profit
Outdoor and Action Sports $ 209,051 $ (6,058 ) $ 215,109
Jeanswear 110,782 (2,704 ) 113,486
Imagewear 19,521 177 19,344
Sportswear 23,576 - 23,576
Contemporary Brands 7,503 (92 ) 7,595
Other 912 - 912

Total coalition profit 371,345 (8,677 ) 380,022

Corporate and Other Expenses (52,949 ) - (52,949 )
Interest, net (20,905 ) - (20,905 )

Income Before Income Taxes $ 297,491 $ (8,677 ) $ 306,168

Constant Currency Financial Information
VF is a global company that reports financial information in U.S. dollars in accordance with generally accepted accounting principles. Foreign currency exchange rate fluctuations affect the amounts reported by VF from translating its foreign revenues and expenses into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to our reported operating results, we present constant currency financial information, which is a non-GAAP financial measure. We
use constant currency information to provide a framework to assess how our businesses performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in our businesses.

To calculate coalition revenues and profits on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

These constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with GAAP. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

VF CORPORATION
Supplemental Financial Information
Business Segment Information - Constant Currency Basis
(In thousands)

Nine Months Impact of Nine Months
Ended Foreign Ended
September 2009 Currency September 2009
As Reported Exchange Constant Currency

Coalition Revenues
Outdoor and Action Sports $ 2,021,095 $ (92,528 ) $ 2,113,623
Jeanswear 1,877,605 (84,631 ) 1,962,236
Imagewear 643,203 15 643,188
Sportswear 356,935 - 356,935
Contemporary Brands 328,611 (5,615 ) 334,226
Other 77,468 - 77,468

Total coalition revenues $ 5,304,917 $ (182,759 ) $ 5,487,676

Coalition Profit
Outdoor and Action Sports $ 364,310 $ (17,640 ) $ 381,950
Jeanswear 266,699 (6,477 ) 273,176
Imagewear 61,476 363 61,113
Sportswear 35,003 - 35,003
Contemporary Brands 23,946 (2,456 ) 26,402
Other 283 - 283

Total coalition profit 751,717 (26,210 ) 777,927

Corporate and Other Expenses (149,492 ) - (149,492 )
Interest, net (63,409 ) - (63,409 )

Income Before Income Taxes $ 538,816 $ (26,210 ) $ 565,026

VF Services
Cindy Knoebel, CFA, VP, Financial & Corporate Communications
212-841-7141 or 336-424-6189, cindy_knoebel@vfc.com

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