SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 1, 1995
Commission file number: 1-5256
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V. F. CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1180120
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1047 NORTH PARK ROAD
WYOMISSING, PA 19610
(Address of principal executive offices)
(610) 378-1151
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
On April 29, 1995, there were 63,462,460 shares of Common Stock outstanding.
VF CORPORATION
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Statements of Income -
Three months ended April 1, 1995 and
April 2, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets - April 1, 1995,
December 31, 1994 and April 2, 1994 . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Three months ended April 1, 1995 and
April 2, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 9
2
VF CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
------------------------------------
APRIL 1 APRIL 2
1995 1994
---------- ----------
NET SALES $1,187,587 $1,123,035
COSTS AND OPERATING EXPENSES
Cost of products sold 799,148 760,423
Marketing, administrative and general expenses 273,194 253,910
---------- ----------
1,072,342 1,014,333
---------- ----------
OPERATING INCOME 115,245 108,702
OTHER INCOME (EXPENSE)
Interest income 2,211 2,508
Interest expense (18,465) (19,191)
Miscellaneous, net (2,500) (4,149)
---------- ----------
(18,754) (20,832)
---------- ----------
INCOME BEFORE INCOME TAXES 96,491 87,870
INCOME TAXES 38,538 34,972
---------- ----------
NET INCOME $ 57,953 $ 52,898
========== ==========
EARNINGS PER COMMON SHARE
Primary $0.89 $0.81
Fully diluted 0.87 0.79
CASH DIVIDENDS PER COMMON SHARE $0.34 $0.32
See notes to consolidated financial statements.
3
VF CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
APRIL 1 DECEMBER 31 APRIL 2
1995 1994 1994
---------- ----------- ----------
ASSETS
CURRENT ASSETS
Cash and equivalents $ 72,260 $ 59,742 $ 25,522
Accounts receivable, less allowances:
Apr. 1 - $34,936; Dec. 31 - $32,794; Apr. 2 - $30,648 702,938 613,337 632,631
Inventories:
Finished products 579,462 473,646 625,359
Work in process 163,832 139,255 136,479
Materials and supplies 191,166 188,437 145,087
---------- ---------- ----------
934,460 801,338 906,925
Other current assets 89,524 76,749 89,008
---------- ---------- ----------
Total current assets 1,799,182 1,551,166 1,654,086
PROPERTY, PLANT AND EQUIPMENT 1,429,554 1,403,852 1,340,110
Less accumulated depreciation 670,799 636,841 569,192
---------- ---------- ----------
758,755 767,011 770,918
INTANGIBLE ASSETS 915,759 911,285 917,945
OTHER ASSETS 120,060 106,146 102,520
---------- ---------- ----------
$3,593,756 $3,335,608 $3,445,469
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 437,553 $ 321,161 $ 446,576
Current portion of long-term debt 2,705 2,773 3,944
Accounts payable 317,892 291,088 257,268
Accrued liabilities 374,960 297,310 362,047
---------- ---------- ----------
Total current liabilities 1,133,110 912,332 1,069,835
LONG-TERM DEBT 516,890 516,700 630,574
OTHER LIABILITIES 168,327 152,871 148,678
REDEEMABLE PREFERRED STOCK 61,737 62,195 63,089
DEFERRED CONTRIBUTIONS TO EMPLOYEE STOCK OWNERSHIP PLAN (41,103) (42,499) (46,301)
---------- ---------- ----------
20,634 19,696 16,788
COMMON SHAREHOLDERS' EQUITY
Common Stock 63,452 64,165 64,584
Additional paid-in capital 558,852 552,927 546,074
Foreign currency translation 27,384 4,557 (14,845)
Retained earnings 1,105,107 1,112,360 983,781
---------- ---------- ----------
1,754,795 1,734,009 1,579,594
---------- ---------- ----------
$3,593,756 $3,335,608 $3,445,469
========== ========== ==========
See notes to consolidated financial statements.
4
VF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED
------------------------------------
APRIL 1 APRIL 2
1995 1994
---------- ----------
OPERATIONS
Net income $ 57,953 $ 52,898
Adjustments to reconcile net income to cash provided by operations:
Depreciation 34,306 30,176
Amortization of intangible assets 8,230 7,403
Other, net 2,087 5,111
Changes in current assets and liabilities:
Accounts receivable (72,991) (75,992)
Inventories (123,131) (32,287)
Accounts payable 22,281 (18,818)
Other, net 63,888 48,929
--------- ---------
Cash provided (used) by operations (7,377) 17,420
INVESTMENTS
Capital expenditures (27,288) (30,031)
Business acquisitions (12,004) (494,751)
Other, net 5,706 (4,258)
--------- ---------
Cash invested (33,586) (529,040)
FINANCING
Increase in short-term borrowings 114,489 510,152
Payment of long-term debt (403) (106,978)
Purchase of Common Stock (43,419) -
Cash dividends paid (22,788) (21,725)
Other, net 5,602 4,129
--------- ---------
Cash provided by financing 53,481 385,578
--------- ---------
NET CHANGE IN CASH AND EQUIVALENTS 12,518 (126,042)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 59,742 151,564
--------- ---------
CASH AND EQUIVALENTS - END OF PERIOD $ 72,260 $ 25,522
========= =========
See notes to consolidated financial statements.
5
VF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
April 1, 1995 are not necessarily indicative of results that may be expected
for the year ending January 1, 1996. For further information, refer to the
consolidated financial statements and notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
NOTE B - EARNINGS PER COMMON SHARE
Primary earnings per share are computed by dividing net income, after deducting
preferred dividends, by the weighted average number of common shares
outstanding. Fully diluted earnings per share assume the conversion of
Preferred Stock and the exercise of stock options that have a dilutive effect.
NOTE C - CAPITAL
There are 150,000,000 authorized shares of Common Stock, no par value - stated
capital $1 a share. At April 1, 1995, there were 63,451,955 shares
outstanding, excluding 3,228,337 treasury shares. At December 31, 1994 and
April 2, 1994, there were 64,164,524 and 64,583,672 shares outstanding,
excluding 2,358,675 and 1,769,197 treasury shares, respectively.
There are 25,000,000 authorized shares of Preferred Stock, $1 par value. Of
these shares, 2,000,000 were designated as Series A, of which none have been
issued, and 2,105,263 shares were designated and issued as 6.75% Series B
Preferred Stock, of which 1,999,567 were outstanding at April 1, 1995,
2,014,427 at December 31, 1994, and 2,043,366 at April 2, 1994.
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VF CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales increased 6% for the first quarter compared with the first quarter of
1994. Net income and earnings per share increased 10%. The increases in sales
and earnings were primarily due to unit volume growth. A smaller portion of
the increases were due to currency translation as the U.S. dollar declined in
relation to the currencies of most European countries where the Company has
operations.
Sales and operating profit by business group are summarized as follows:
FIRST QUARTER
---------------------------------------------
PERCENT
1995 1994 CHANGE
---------- ---------- -------
(In thousands)
NET SALES
Jeanswear $ 638,496 $ 589,000 8%
Decorated Knitwear 104,132 116,883 (11)
Intimate Apparel 181,855 174,865 4
Playwear 82,986 77,845 7
Specialty Apparel 180,118 164,442 10
---------- ---------- ---
$1,187,587 $1,123,035 6%
========== ========== ===
OPERATING PROFIT
Jeanswear $ 90,000 $ 80,544 12%
Decorated Knitwear (8,204) (5,373) (53)
Intimate Apparel 16,367 17,502 (6)
Playwear 5,918 6,149 (4)
Specialty Apparel 21,603 19,696 10
---------- ---------- ---
125,684 118,518 6%
===
CORPORATE EXPENSES (10,439) (9,816)
INTEREST, NET (16,254) (16,683)
MISCELLANEOUS, NET (2,500) (4,149)
---------- ----------
INCOME BEFORE INCOME TAXES $ 96,491 $ 87,870
========== ==========
The Jeanswear business group includes the Lee and Wrangler divisions in the
United States and in international markets, primarily in Europe. This business
group also includes Girbaud, which designs and markets licensed jeanswear
products in the United States under the Marithe & Francois Girbaud(R) label.
Sales and operating profit increased strongly at Wrangler in the United States
and at Lee and Wrangler in international markets.
7
The Decorated Knitwear business group consists of Bassett-Walker, Nutmeg,
Cutler sports apparel and JanSport imprinted apparel. A significant profit
improvement at Bassett-Walker was offset by declines at Nutmeg and Cutler,
reflecting the effects of the continued weakness in the sports apparel market.
Overall, sales and profits for the first quarter are at an expected low level
due to the seasonal nature of this group.
The Intimate Apparel business group includes the operations of Vanity Fair
Mills domestically and the intimate apparel divisions in Europe. Sales improved
at both Vanity Fair Mills and at international divisions. Margins improved
domestically but declined slightly in international markets due to higher
promotional spending.
The Playwear business group consists of Healthtex, the playwear and sleepwear
operations of Cutler and the preschool sizes of Lee and Wrangler. The small
reduction in operating profit resulted from a profit reduction at Cutler, which
was affected by continued pricing pressures in the discount channel of
distribution and by operating difficulties.
The Specialty Apparel business group consists primarily of the Red Kap and
Jantzen divisions and JanSport equipment. The group's sales and operating
profit increases resulted primarily from the higher volumes experienced at Red
Kap and Jantzen.
Marketing, administrative and general expenses were 23.0% of sales, compared
with 22.6% in the first quarter of 1994. Marketing, administrative and general
expenses as a percent of sales in the first quarter are historically at higher
levels than annual amounts and are not necessarily representative of the trend
expected for the year.
Net interest expense declined slightly in 1995. The effect of a reduced
borrowing level was offset by higher short-term interest rates.
FINANCIAL CONDITION AND LIQUIDITY
The financial condition of the Corporation is reflected in the following:
APRIL 1 DECEMBER 31 APRIL 2
1995 1994 1994
----------- ----------- ----------
(Dollars in millions)
Working capital $666.1 $638.8 $584.3
Current ratio 1.6 to 1 1.7 to 1 1.5 to 1
Debt to total capital 35.3% 32.7% 40.6%
Days' sales outstanding in accounts receivable increased at the end of the 1995
quarter due to a higher relative amount of international receivables, which
generally have longer terms.
8
Inventories are higher than at the comparable date in the prior year due to the
higher sales level in 1995. Inventories increased from year-end 1994 to meet
seasonal requirements.
The Company purchased 869,700 shares of its Common Stock during the first
quarter in open market transactions pursuant to an authorization from the Board
of Directors to purchase up to three million shares.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of the Corporation held on April
18, 1995, shares representing a total of 66,112,529 votes were
outstanding and entitled to vote on the following matters:
1) The Directors elected at the meeting for a term of three years
were Robert D. Buzzell, Edward E. Crutchfield, Jr. and Leon
C. Holt, Jr.
2) The proposal to adopt the 1995 Key Employee Restricted Stock
Plan was approved. The vote was 51,398,759 for, 6,050,701
against and 408,561 abstaining.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of earnings per share for the three
months ended April 1, 1995 and April 2, 1994.
Exhibit 27 - Financial data schedule as of April 1, 1995.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed
for the three months ended April 1, 1995.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
V.F. CORPORATION
By: /s/ Gerard G. Johnson
--------------------------
Gerard G. Johnson
Vice President - Finance
(Chief Financial Officer)
Date: May 10, 1995
By: /s/ Robert K. Shearer
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Robert K. Shearer
Vice President - Controller
(Chief Accounting Officer)
10