SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 2002
Commission file number: 1-5256
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
(Full title of plan)
105 CORPORATE CENTER BLVD.
GREENSBORO, NC 27408
(Address of principal executive offices)
(336) 424-6000
(Registrant's telephone number, including area code)
1
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
TABLE OF CONTENTS
Page No.
Report of Independent Auditors 4
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001 5
Statements of Changes in Net Assets Available for Benefits -
For the Years Ended December 31, 2002, 2001, and 2000 6
Notes to Financial Statements 7
Supplemental Schedules*:
Schedule H - Line 4i - Schedule of Assets (Held at End of Year) 15
* - Other schedules required by Section 2520.103-10 of the
Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA have been omitted because they are
not applicable.
Exhibit 23.1 - Consent of Independent Auditors 16
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the VF
Corporation Pension Plan Committee has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
VF Corporation Tax-Advantaged Savings Plan
for Salaried Employees
By: /s/ Frank C. Pickard III
---------------------------------------
Frank C. Pickard III
Vice President, Treasurer
VF Corporation
Date: June 27, 2003
3
REPORT OF INDEPENDENT AUDITORS
To the Participants and Administrator of the
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the VF Corporation Tax-Advantaged Savings Plan for Salaried Employees (the
"Plan") at December 31, 2002 and December 31, 2001, and the changes in net
assets available for benefits for the three years in the period ended December
31, 2002 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H-Line
4i-Schedule of Assets (Held at End of Year) is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Greensboro, NC
June 6, 2003
4
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
2002 2001
------------ ------------
ASSETS
Investments, at fair value
VF Corporation common stock -
821,584 shares in 2002
633,893 shares in 2001 $ 31,199,004 $ 24,731,732
VF Corporation ESOP preferred stock -
1,195,198 shares in 2002
1,477,929 shares in 2001 69,561,752 92,252,328
Other securities 284,154,240 211,909,046
------------ ------------
Total investments 384,914,996 328,893,106
Loans receivable from participants 12,893,922 13,300,763
------------ ------------
TOTAL ASSETS 397,808,918 342,193,869
------------ ------------
LIABILITIES
Employee Stock Ownership
Plan obligation payable to VF Corporation 0 2,872,310
------------ ------------
TOTAL LIABILITIES 0 2,872,310
------------ ------------
Net assets available for benefits $397,808,918 $339,321,559
============ ============
See notes to financial statements.
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VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31
2002 2001 2000
-------------- ------------ ---------------
Investment income(loss)
Dividends on VF Corporation ESOP
Preferred Stock $ 2,740,035 $ 3,147,511 $ 3,335,572
Interest 0 0 9,214
Net realized and unrealized appreciation
(depreciation) in fair value of investments (32,304,400) (12,351,851) (2,907,045)
Dividends on VF Corporation common stock 923,607 623,262 613,165
Income from mutual funds and bank common
Trust funds 1,934,632 3,451,137 13,047,168
-------------- ------------ ---------------
(26,706,126) (5,129,941) 14,098,074
-------------- ------------ ---------------
Interest on participant loan repayments 901,615 1,005,453 907,214
Transfer from merged plans (Note A) 109,477,867 0 22,460,258
Participant contributions 17,693,205 21,305,026 21,275,592
VF Corporation contributions 6,227,262 7,086,364 7,172,768
-------------- ------------ ---------------
107,593,823 24,266,902 65,913,906
-------------- ------------ ---------------
Benefits paid to participants (48,756,021) (24,965,767) (26,745,185)
Forfeitures that reduce
VF Corporation contributions (268,296) (232,386) (287,053)
Interest paid to VF Corporation on Employee
Stock Ownership Plan obligation (82,147) (854,340) (1,744,899)
-------------- ------------ ---------------
Net increase (decrease) 58,487,359 (1,785,591) 37,136,769
Net assets available for benefits
at beginning of year 339,321,559 341,107,150 303,970,381
-------------- ------------ ---------------
Net assets available for benefits
at end of year $ 397,808,918 $339,321,559 $ 341,107,150
============== ============ ===============
See notes to financial statements.
6
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
NOTE A -- DESCRIPTION OF THE PLAN
VF Corporation (the Corporation) sponsors the VF Corporation Tax-Advantaged
Savings Plan for Salaried Employees (the Plan), which is a cash or deferred plan
under Section 401(k) of the Internal Revenue Code. Under the Plan, certain
salaried employees of specified subsidiaries may elect to contribute between 2%
and 25% of their compensation to the Plan (highly compensated employees are
limited to 10%). The Corporation matches employee contributions by 50% for up to
6% of compensation contributed by the employee. Employees remain fully vested in
their contributions to the Plan. The Corporation's matching contributions are
vested monthly on a pro rata basis, with full vesting after five years of
service or upon normal retirement, disability or death.
The Plan includes an Employee Stock Ownership Plan (ESOP). In 1990, the ESOP
purchased 2,105,263 shares of VF Corporation 6.75% Series B ESOP Convertible
Preferred Stock (ESOP Preferred Stock) for $65.0 million. Each share of ESOP
Preferred Stock, which has a redemption value of $30.875 plus cumulative accrued
dividends, is convertible into 1.6 shares of VF Corporation Common Stock and is
entitled to two votes. The trustee for the ESOP may convert the ESOP Preferred
Stock to Common Stock at any time or may cause the Corporation to redeem the
ESOP Preferred Stock under certain circumstances. The ESOP Preferred Stock also
has preference in liquidation over all other stock issues. Of the shares of ESOP
Preferred Stock owned by the ESOP, 1,195,198 shares in 2002 and 1,420,338 shares
in 2001 have been allocated to employees.
The ESOP's purchase of the ESOP Preferred Stock was funded by a loan of $65.0
million from the Corporation that bears interest at 9.8%. The loan was repaid in
2002. In 2002 all remaining shares of ESOP Preferred Stock were allocated to
Plan participants. Effective April 2002 the match is invested in the same manner
as employee contributions. Effective October 2002, participants may diversify
their ESOP Preferred Stock balances.
7
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE A -- DESCRIPTION OF THE PLAN (Continued)
Employee contributions are invested at the direction of the employee in one or
more of the funds administered by the Plan's trustees. All Plan assets are
trusteed by Fidelity Management Trust Company (Fidelity) with the exception of
the Fixed Income Fund which is trusteed by UMB Bank, n.a. The investment
programs and investment objectives of the Plan funds are as follows:
(a) Money Market Fund: Monies are invested in a money market fund.
(b) Fixed Income Fund: Monies are invested in investments that
provide a fixed rate of return.
(c) Balanced Fund: Monies are invested in investments to obtain as
much income as possible, consistent with the preservation and
conservation of capital.
(d) Equity Growth & Income Fund: Monies are invested in
investments that are currently paying dividends and/or offer
prospects for growth of capital and future income, with
emphasis on capital appreciation.
(e) Index 500 Fund: Monies are invested in the 500 stocks that
make up the S&P 500 Stock Price Index.
(f) Dividend Growth Fund: Monies are invested in stocks of
companies that have the potential to increase the amount of
their dividends or begin paying them if none are being paid
now.
(g) Small-Cap Value Fund: Monies are invested in U.S. common
stocks of small companies whose price is undervalued.
(h) Small-Cap Growth Fund: Monies invested in small and medium
size companies with undervalued assets or favorable growth
prospects.
(i) Foreign Fund: Monies are invested in stocks and debt
obligations of companies and governments outside the United
States.
(j) VF Corporation Common Stock Fund: Monies are invested in
common stock of the Corporation purchased at prevailing prices
on the New York Stock Exchange on the date of purchase.
Employees can direct no more than 50% of their contributions
to the VF Corporation Common Stock Fund.
(k) Various Mutual Funds: Participants can select from an
additional 250 mutual funds offered through Fidelity
Investments Funds Net Program and additional Fidelity Fund
options with various investment objectives.
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VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE A -- DESCRIPTION OF THE PLAN (Continued)
Individual accounts are maintained for each participant; each account includes
the individual's contributions, Corporation matching contributions and
investment funds' earnings. Accounts become payable upon retirement, disability,
death or termination of employment. Participants may also withdraw all or a
portion of their accounts by filing a written request that demonstrates
financial hardship. Participants may elect to receive distributions in a lump
sum or in an annuity, or accounts may be rolled over into another IRS-approved
tax deferral vehicle. Forfeitures are used to reduce VF Corporation's obligation
to pay plan expenses.
The transfers of applicable participant balances from the North Face, Inc.
401(k) Savings Plan and the Blue Bell Savings, Profit Sharing and Retirement
Plan, which were merged into the Plan in 2002 and the Bestform Savings Plan,
Todd Uniform and Horace Small Savings Plans, which were merged into the Plan in
2000, have been disclosed separately in the respective Statements of Changes in
Net Assets Available for Benefits.
Participants may borrow from their individual account. Participants are charged
interest at the Morgan Guaranty "Published" prime rate at the time of the loan
and repay the principal within 60 months, or 120 months if the loan is for the
purchase of their primary residence. Participants may borrow up to 50% of the
participant's total vested account balance, but may not borrow from the
Corporation matching portion. Payment in full is required at termination of
employment. There were 2,821 loans outstanding at December 31, 2002.
Although it has no intent to do so, the Corporation may terminate the Plan in
whole or in part at any time. In the event of termination, participants become
fully vested in their accounts.
NOTE B -- SIGNIFICANT ACCOUNTING POLICIES
Investments are stated at fair value. Securities traded on a national securities
exchange are valued at the last reported sales price on the last business day of
the plan year. The ESOP Preferred Stock is stated at fair value, based on the
greater of 160% of the fair value of the Corporation's Common Stock or the
preferred stock's stated redemption price of $30.875 per share. The fair value
of the participation units owned by the Plan in mutual funds and bank common
trust funds is based on quoted redemption values on the last business day of the
Plan year. Purchases and sales of securities, including gains and losses
thereon, are recorded as of the trade date. Dividends are recorded on the
ex-dividend date.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains or losses and unrealized
appreciation or depreciation on those investments. Realized gains or losses are
calculated on an average cost basis.
Administrative expenses consisting primarily of fees for legal, accounting and
other services are paid by the Corporation in accordance with the Plan.
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VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE B -- SIGNIFICANT ACCOUNTING POLICIES (Continued)
Payment of Benefits: Benefits are recorded when paid.
Use of Estimates: In preparing financial statements in accordance with generally
accepted accounting principles, management makes estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
Risks and Uncertainties: The Plan provides for various mutual fund investment
options in stocks, bonds and fixed income securities. Investments are exposed to
various risks, such as interest rate, market and credit. Due to the level of
risk associated with certain investment securities and the level of uncertainty
related to changes in the value of investment securities, it is at least
reasonably possible that changes in risks in the near term would materially
affect participants' account balances and the amounts reported in the statements
of net assets available for plan benefits and the statements of changes in net
assets available for plan benefits.
NOTE C -- INCOME TAX STATUS
The Internal Revenue Service has issued a Favorable Determination Letter dated
September 23, 2002 stating that the Plan qualifies under the appropriate
sections of the Internal Revenue Code (IRC) and is, therefore, not subject to
tax under present income tax law. Once qualified, the Plan is required to
operate in conformity with the IRC to maintain its qualification. The VF
Corporation Pension Plan Committee is not aware of any action or series of
events that have occurred that might adversely affect the Plan's qualified
status. The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that the Plan
is currently designed and is currently being operated in compliance with the
applicable requirements of the IRC.
NOTE D -- RELATED PARTY TRANSACTIONS
Related parties to the Plan include VF Corporation, the Plan sponsor, and
Fidelity Management Trust Company and United Missouri Bank (UMB), the Plan's
trustees. Certain plan investments are funds managed by Fidelity and UMB and
therefore these transactions qualify as party-in-interest.
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VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE E -- INVESTMENTS
Net realized and unrealized appreciation (depreciation) in fair value of
investments included in Plan equity includes the following:
Net Realized and Unrealized
Appreciation (Depreciation) in Fair Value
Fair Value for the Year Ended December 31 At December 31
-------------------------------------------------- -------------------------------
2002 2001 2000 2002 2001
-------------- --------------- --------------- -------------- --------------
Fair value as determined by
Quoted market or stated
Redemption price:
VF Corporation common stock $ (781,330) $ 2,452,027 $ 5,219,011 $ 31,199,004 $ 24,731,732
ESOP Preferred Stock (5,218,932) 6,839,407 15,139,218 69,561,752 92,252,328
Mutual funds and
bank common trust funds (28,611,592) (23,634,971) (25,209,654) 212,011,805 177,870,890
-------------- --------------- --------------- ------------- --------------
(34,611,854) (14,343,537) (4,851,425) 312,772,561 294,854,950
-------------- --------------- --------------- -------------- --------------
Fair value as determined by
Plan trustee:
Mutual funds and
bank common trust funds 2,307,454 1,991,686 1,944,380 72,142,435 34,038,156
-------------- --------------- --------------- -------------- --------------
2,307,454 1,991,686 1,944,380 72,142,435 34,038,156
-------------- --------------- --------------- -------------- --------------
$ (32,304,400) $ (12,351,851) $(2,907,045) $ 384,914,996 $ 328,893,106
============== =============== =============== ============== ==============
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VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE E -- INVESTMENTS (Continued)
The fair value of investments that individually represent 5% or more of the
Plan's net assets at December 31 of one or both years are as follows:
2002 2001
--------------- ---------------
ESOP Preferred Stock $ 69,561,752 $ 92,252,328
(1,195,198 shares and 1,477,929 shares)
Fidelity Growth & Income Fund 58,865,805 52,881,518
(1,942,125 shares and 1,414,701 shares)
VF Corporation Common Stock 31,199,004 24,728,178
(821,584 shares and 633,893 shares)
Fidelity US Equity Index Commingled Pool 32,870,481 32,506,489
(1,251,255 shares and 963,155 shares)
ProCapp Fixed Income Fund 72,142,435 34,038,156
(5,884,375 shares and 2,931,796 shares)
Fidelity Retirement Money Market Portfolio 22,657,874 17,963,369
(22,657,874 shares and 17,963,369 shares)
12
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
NOTE F -- NONPARTICIPANT DIRECTED ACCOUNTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant directed investments is as follows:
Employee Stock Ownership
Plan
December 31
2002 2001
-------------- ---------------
ASSETS
VF Corporation ESOP
Preferred Stock
1,195,198 shares in 2002
1,477,929 shares in 2001 - $ 92,252,328
Other securities - 373,368
-------------- ---------------
Total investments - 92,625,696
-------------- ---------------
TOTAL ASSETS - 92,625,696
-------------- ---------------
LIABILITIES
Employee Stock Ownership
Plan obligation payable to VF
Corporation - 2,872,310
-------------- ---------------
TOTAL LIABILITIES - 2,872,310
-------------- ---------------
Net assets available for benefits - $ 89,753,386
============== ===============
As discussed in Note A, plan participants may diversify their ESOP Preferred
Stock balances and therefore there are no non-participant directed investments
at December 31, 2002.
13
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
NOTE F -- NONPARTICIPANT DIRECTED ACCOUNTS (Continued)
Year Ended December 31
Changes in Net Assets 2002 2001 2000
--------------------- --------------- --------------- --------------
Investment income:
Dividends on ESOP Preferred Stock - $ 3,147,511 $ 3,335,572
Net realized and unrealized appreciation
(depreciation)in fair value of investments - 6,389,407 15,139,218
Income from mutual funds and
bank common trust funds - 19,947 37,564
--------------- --------------- --------------
- 9,556,865 18,512,354
Contributions
VF Corporation - 7,121,014 7,172,768
--------------- --------------- --------------
- 7,121,014 7,172,768
--------------- --------------- --------------
Benefits paid to participants - (5,412,637) (3,950,527)
Forfeitures that reduce
VF Corporation contributions - (207,517) (201,027)
Interest paid to VF Corporation on Employee
Stock Ownership Plan obligation - (854,340) (1,744,899)
--------------- --------------- --------------
Net increase (decrease) - 10,653,385 19,788,669
Net assets available for benefits
Beginning of year - 79,100,001 59,311,332
--------------- --------------- --------------
End of year - $ 89,753,386 $ 79,100,001
=============== =============== ==============
14
VF Corporation Tax-Advantaged Savings Plan
for Salaried Employees
Schedule H-Line 4i-Schedule of Assets (Held at End of Year)
At December 31, 2002
Identity of issue, borrower, Number of Current
Lessor, or similar party Shares Cost Value
---------------------------- --------------- --------------- --------------
*Fidelity Puritan Fund 872,794 $ 14,742,949 $ 13,781,416
*Fidelity Growth & Income Fund 1,942,125 60,660,601 58,865,805
*Fidelity Diversified International Fund 348,281 6,861,448 5,976,508
*Fidelity Dividend Growth Fund 168,973 4,341,405 3,771,479
*Fidelity Retirement Money Market Portfolio 22,657,874 22,657,874 22,657,874
*Fidelity U.S. Equity Index Commingled Pool 1,251,255 41,513,754 32,870,481
Baron Asset Fund 202,544 9,090,300 6,971,575
Longleaf Small Cap Fund 288,585 6,244,765 5,866,938
*ProCapp Fixed Income Fund 5,884,375 67,461,824 72,142,435
*VF Corporation Common Stock 821,584 19,842,846 31,199,004
*VF Corporation ESOP Preferred Stock 1,195,198 53,354,074 69,561,752
*Various Mutual Funds N/A 74,637,723 61,249,729
Loans receivable from participants
(with interest rates from 5% to 9%) N/A 12,893,922 12,893,922
--------------- --------------- --------------
$ 394,303,485 $ 397,808,918
=============== =============== ==============
* represents a party-in-trust
15