Exhibit 99.1
[VF LOGO]
FOR IMMEDIATE RELEASE Contact: Cindy Knoebel
VP, Financial & Corporate
Communications
VF Services, Inc.
(336) 424-6189/(212) 696-1110
VF ANNOUNCES RECORD FIRST QUARTER EPS AND DECLARES DIVIDEND;
REAFFIRMS FULL YEAR GUIDANCE
VF's first quarter conference call will be held at 2:00 p.m. ET on April 22nd
and can be accessed via the Company's web site www.vfc.com or
www.companyboardroom.com. A replay will be available shortly after the end of
the conference call through April 29th by dialing 800-642-1687 or 706-645-9291,
pass code: 9631035.
GREENSBORO, NORTH CAROLINA - APRIL 22, 2003 - VF CORPORATION (NYSE: VFC), the
world's largest apparel company, today announced that first quarter earnings
from continuing operations rose to a record $.83 per share, compared with $.67
per share in the first quarter of 2002. Prior year earnings per share included a
net restructuring charge of $.03 per share (see page 7). Income from continuing
operations increased to $92.1 million from $77.0 million in the 2002 period.
Excluding restructuring charges taken in the first quarter of 2002, income from
continuing operations rose 14% in 2003 from $80.5 million in the prior year
period. Reflecting a required change in accounting policy for goodwill, the
Company reported in the first quarter of 2002 a net loss of $448.3 million,
equal to $3.96 per share. All per share amounts are presented on a diluted
basis. Sales in the quarter rose 3% to $1,250.1 million versus $1,212.3 million
in the prior year's quarter.
Foreign currency translation favorably impacted both sales and earnings in the
quarter. Excluding foreign currency effects, sales were about flat with the
prior year period. The benefit to earnings per share in the quarter was $.05.
Commented Mackey J. McDonald, chairman and chief executive officer, "This was a
great quarter. Our focus on managing costs is serving us well in this
environment. As important, our brands and financial position remain strong,
providing us with excellent leverage when conditions improve."
BUSINESS REVIEW
International jeans sales rose 15% reflecting the positive effects of foreign
currency translation. Domestic jeans sales declined 7% due to aggressive actions
taken by retail customers during the quarter to control inventories and a number
of store closings by customers. Global intimate apparel sales rose 9% in the
quarter, with increases across the Company's department store, mass market and
international businesses. Sales in the Company's outdoor coalition, which
includes The North Face, JanSport and Eastpak brands, rose 15% in the quarter,
driven by double-digit sales increases of The North Face brand products in both
the U.S. and internationally. Imagewear sales rose 10%, with a double-digit
increase in licensed sports apparel sales.
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April 22, 2003
Playwear sales declined 15%; the Company recently disclosed that it was
exploring strategic options for this business.
On a currency-adjusted basis, international jeans sales rose 2%, global intimate
apparel sales rose 5% and outdoor sales rose 7%.
Gross margins rose almost two full percentage points in the quarter, to 37.5%,
reflecting lower product costs. Operating margins improved from 11.3% to 12.2%;
excluding the impact of restructuring charges, operating margins in the 2002
quarter were 11.8%. The Company's international jeanswear, intimate apparel,
imagewear and outdoor businesses all reported improved margins in the quarter.
Inventories rose in the quarter as anticipated, reflecting planned increases to
support improvements in customer service, the aforementioned tight inventory
control by retail customers and the impact of foreign currency translation. The
Company continues to expect that inventories at year-end will be flat to up
slightly over prior year levels, depending on sales trends. The Company's
balance sheet remains exceptionally strong. Debt as a percent of total capital
was 28.0%; net of cash, the ratio was 18.9%.
OUTLOOK
The Company continues to expect that earnings for the full year should increase
5-10% over 2002 earnings per share of $3.38 from continuing operations (which
excludes restructuring charges of $.14 per share). We also continue to
anticipate that operating margins will improve to 13% in 2003 and that cash flow
from operations will be approximately $400 million. In terms of the second
quarter, we expect sales to be flat. Excluding the impact of restructuring
charges in the second quarter of 2002, earnings per share in the second quarter
of 2003 could be flat to down 5%, which is in line with our original plan.
"Our guidance for the year - higher margins, strong cash flow and a healthy
increase in earnings per share - remains intact and reflects our confidence in
our ability to successfully navigate our way through an environment that offers
both significant challenges as well as opportunities," Mr. McDonald concluded.
DIVIDEND DECLARED
The Board of Directors declared a regular quarterly cash dividend of $.25 per
share, payable on June 20, 2003 to shareholders of record as of the close of
business on June 10, 2003.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included in this release are "forward-looking statements"
within the meaning of the federal securities laws. Management cautions that
forward-looking statements are not guarantees and that actual results could
differ materially from those expressed or implied in the forward-looking
statements. Important risk factors that could cause the actual results of
operations or financial condition of the Company to differ include, but are not
necessarily limited to, the overall level of consumer spending for apparel;
changes in trends in the segments of the market in which the Company competes;
competitive conditions in and financial strength of our suppliers and of our
retail customers; actions of competitors, customers, suppliers and service
providers that may impact the Company's business; the ability to achieve
anticipated cost savings from the recent
Page 3 of 7
April 22, 2003
restructuring initiatives; any continuation of hostilities or additional
terrorist actions; and the impact of economic and political factors in the
markets where the Company competes, such as recession or changes in interest
rates, currency exchange rates, price levels, capital market valuations and
other external economic and political factors over which the Company has no
control. Investors are also directed to consider the risks and uncertainties
discussed in documents filed by the Company with the Securities and Exchange
Commission.
ABOUT THE COMPANY
VF Corporation is the world's largest apparel company and a leader in jeanswear,
intimate apparel, playwear, workwear and daypacks. Its principal brands include
Lee(R), Wrangler(R), Riders(R), Rustler(R), Vanity Fair(R), Vassarette(R),
Bestform(R), Lily of France(R), Lee Sport(R), Healthtex(R), JanSport(R),
Eastpak(R), Red Kap(R) and The North Face(R).
VF Corporation's press releases, annual report and other information can be
accessed through the company's home page, http://www.vfc.com.
###
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April 22, 2003
VF CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
-------------------------------
APRIL 5 MARCH 30
2003 2002 *
----------- -----------
NET SALES $ 1,250,055 $ 1,212,262
COSTS AND OPERATING EXPENSES
Cost of products sold 781,292 784,368
Marketing, administrative
and general expenses 322,334 295,117
Other operating (income) expense, net (6,330) (4,497)
----------- -----------
1,097,296 1,074,988
----------- -----------
OPERATING INCOME 152,759 137,274
OTHER INCOME (EXPENSE)
Interest, net (12,068) (17,387)
Miscellaneous, net 731 1,134
----------- -----------
(11,337) (16,253)
----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 141,422 121,021
INCOME TAXES 49,356 43,974
----------- -----------
INCOME FROM CONTINUING OPERATIONS 92,066 77,047
DISCONTINUED OPERATIONS -- 1,949
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING POLICY FOR GOODWILL -- (527,254)
----------- -----------
NET INCOME (LOSS) $ 92,066 $ (448,258)
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE - BASIC
Income from continuing operations $ 0.84 $ 0.67
Discontinued operations -- 0.02
Cumulative effect of change in accounting policy -- (4.80)
Net income (loss) 0.84 (4.11)
EARNINGS (LOSS) PER COMMON SHARE - DILUTED
Income from continuing operations $ 0.83 $ 0.67
Discontinued operations -- 0.02
Cumulative effect of change in accounting policy -- (4.65)
Net income (loss) 0.83 (3.96)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 108,356 109,955
Diluted 110,943 113,377
CASH DIVIDENDS PER COMMON SHARE $ 0.25 $ 0.24
* Reclassified to present the Private Label knitwear and the Jantzen
swimwear businesses as discontinued operations.
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April 22, 2003
VF CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
APRIL 5 JANUARY 4 MARCH 30
2003 2003 2002*
----------- ----------- -----------
ASSETS
CURRENT ASSETS
Cash and equivalents $ 265,340 $ 496,367 $ 221,080
Accounts receivable, net 688,908 587,859 662,993
Inventories 894,116 830,518 817,857
Other current assets 143,512 154,513 153,449
Current assets of discontinued operations 3,722 5,283 63,626
----------- ----------- -----------
Total current assets 1,995,598 2,074,540 1,919,005
PROPERTY, PLANT AND EQUIPMENT 1,543,312 1,539,269 1,565,036
Less accumulated depreciation 982,763 972,723 948,871
----------- ----------- -----------
560,549 566,546 616,165
GOODWILL 475,885 473,355 470,466
OTHER ASSETS 397,737 386,204 397,438
NONCURRENT ASSETS OF DISCONTINUED OPERATIONS 2,502 2,506 13,917
----------- ----------- -----------
$ 3,432,271 $ 3,503,151 $ 3,416,991
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 58,553 $ 60,918 $ 66,246
Current portion of long-term debt 782 778 703
Accounts payable 235,758 298,456 231,302
Accrued liabilities 440,039 502,057 468,984
Current liabilities of discontinued operations 8,389 12,635 52,215
----------- ----------- -----------
Total current liabilities 743,521 874,844 819,450
LONG-TERM DEBT 602,172 602,287 703,851
OTHER LIABILITIES 346,818 331,270 231,107
REDEEMABLE PREFERRED STOCK 35,091 36,902 43,288
DEFERRED CONTRIBUTIONS TO EMPLOYEE
STOCK OWNERSHIP PLAN -- -- (298)
----------- ----------- -----------
35,091 36,902 42,990
COMMON SHAREHOLDERS' EQUITY
Common Stock 107,848 108,525 109,902
Additional paid-in capital 931,094 930,132 913,589
Accumulated other comprehensive income (loss) (205,400) (214,141) (106,945)
Retained earnings 871,127 833,332 703,047
----------- ----------- -----------
Total common shareholders' equity 1,704,669 1,657,848 1,619,593
----------- ----------- -----------
$ 3,432,271 $ 3,503,151 $ 3,416,991
=========== =========== ===========
* Reclassified to present the Private Label knitwear and the Jantzen
swimwear businesses as discontinued operations.
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April 22, 2003
VF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED
------------------------
APRIL 5 MARCH 30
2003 2002*
--------- ---------
OPERATIONS
Net income (loss) $ 92,066 $(448,258)
Adjustments to reconcile net income (loss)
to cash provided (used) by operating activities
of continuing operations:
Discontinued operations -- (1,949)
Cumulative effect of change in accounting policy -- 527,254
Restructuring costs -- 7,176
Depreciation 27,889 26,422
Other, net 6,786 (875)
Changes in current assets and liabilities:
Accounts receivable (100,528) (87,799)
Inventories (54,704) 40,629
Accounts payable (65,683) (7,575)
Other, net (41,941) 53,464
--------- ---------
Cash provided (used) by operating activities of
continuing operations (136,115) 108,489
INVESTMENTS
Capital expenditures (25,528) (12,782)
Business acquisitions (2,914) --
Other, net (5,995) 5,863
--------- ---------
Cash used by investing activities of
continuing operations (34,437) (6,919)
FINANCING
Decrease in short-term borrowings (4,119) (10,321)
Payment of long-term debt (102) (200,152)
Purchase of Common Stock (28,562) (41,973)
Cash dividends paid (27,750) (26,927)
Proceeds from issuance of Common Stock 941 25,038
Other, net (486) (2,402)
--------- ---------
Cash used by financing activities of
continuing operations (60,078) (256,737)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS (3,651) 46,805
EFFECT OF FOREIGN CURRENCY RATE CHANGES ON CASH 3,254 (2,607)
--------- ---------
NET CHANGE IN CASH AND EQUIVALENTS (231,027) (110,969)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 496,367 332,049
--------- ---------
CASH AND EQUIVALENTS - END OF PERIOD $ 265,340 $ 221,080
========= =========
* Reclassified to present the Private Label knitwear and the Jantzen
swimwear businesses as discontinued operations.
...Continued
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April 22, 2003
VF CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FIRST QUARTER 2002 FULL YEAR 2002
---------------------------- ----------------------------
AS AS
REPORTED PRO FORMA * REPORTED PRO FORMA *
----------- ----------- ----------- -----------
NET SALES $ 1,212,262 $ 1,212,262 $ 5,083,523 $ 5,083,523
COSTS AND OPERATING EXPENSES
Cost of products sold 784,368 780,230 3,254,008 3,236,160
Marketing, administrative and general expenses 295,117 293,876 1,229,902 1,221,408
Other operating (income) expense, net (4,497) (4,497) (22,311) (22,311)
----------- ----------- ----------- -----------
1,074,988 1,069,609 4,461,599 4,435,257
----------- ----------- ----------- -----------
OPERATING INCOME 137,274 142,653 621,924 648,266
OTHER INCOME (EXPENSE)
Interest, net (17,387) (17,387) (63,928) (63,928)
Miscellaneous, net 1,134 1,134 3,732 3,732
----------- ----------- ----------- -----------
(16,253) (16,253) (60,196) (60,196)
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 121,021 126,400 561,728 588,070
INCOME TAXES 43,974 45,928 197,300 207,194
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS $ 77,047 $ 80,472 $ 364,428 $ 380,876
=========== =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE
FROM CONTINUING OPERATIONS
Basic $ 0.67 $ 0.70 $ 3.26 $ 3.41
Diluted 0.67 0.70 3.24 3.38
* The pro forma Consolidated Statements of Income exclude the effects of the 2001 / 2002 Strategic Repositioning
Program, as follows:
Costs and Operating Expenses
Costs of products sold $ 4,138 $ 17,848
Marketing, administrative and general expenses 1,241 8,494
----------- -----------
$ 5,379 $ 26,342
=========== ===========
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