SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 2, 1999
Commission file number: 1-5256
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 number)
628 GREEN VALLEY ROAD, SUITE 500
GREENSBORO, NORTH CAROLINA 27408
(Address of principal executive offices)
(336) 547-6000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, without par value, New York Stock Exchange
stated capital $1 per share and
Preferred Stock Purchase Rights Pacific Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 2, 1999, 119,752,106 shares of Common Stock of the registrant were
outstanding, and the aggregate market value of the common shares (based on the
closing price of these shares on the New York Stock Exchange) of the registrant
held by nonaffiliates was approximately $4.7 billion. In addition, 1,760,119
shares of Series B ESOP Convertible Preferred Stock of the registrant were
outstanding and convertible into 2,816,190 shares of Common Stock of the
registrant, subject to adjustment. The trustee of the registrant's Employee
Stock Ownership Plan is the sole holder of such shares, and no trading market
exists for the Series B ESOP Convertible Preferred Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
January 2, 1999 (Item 1 in Part I and Items 5, 6, 7 and 8 in Part II).
Portions of the Proxy Statement dated March 17, 1999 for the Annual Meeting of
Shareholders to be held on April 20, 1999 (Item 4A in Part I and Items 10, 11,
12 and 13 in Part III).
2
PART I
ITEM 1. BUSINESS
VF Corporation, through its operating subsidiaries, designs, manufactures and
markets branded jeanswear, workwear, intimate apparel, knitwear, children's
playwear and other apparel. VF Corporation, organized in 1899, oversees the
operations of its subsidiaries, providing them with financial and administrative
resources. Management of each marketing unit is responsible for the growth and
development of its business, within guidelines established by VF Corporation
management. Unless the context indicates otherwise, the term "Company" used
herein means VF Corporation and its subsidiaries.
BUSINESS ORGANIZATION
Through 1996, VF operated as a group of relatively autonomous businesses, with
the management of each business unit responsible for its own manufacturing,
marketing and administrative functions, within guidelines established by VF
Corporation management. Beginning in late 1996, the Company's organizational
structure was changed, resulting in the previously separate operating businesses
being consolidated into six consumer-focused marketing coalitions - - Jeanswear,
Workwear, Intimate Apparel, Knitwear, Playwear and International. The individual
marketing functions have remained as separate business units, allowing marketing
specialists to build and develop their brands. However, many of the Company's
sourcing, manufacturing and administrative functions, previously performed in
separate operating units, are carried out under this new management structure on
either a coalition or a Company-wide basis. These changes, plus investments in
new business systems and processes, are expected to result in significant annual
cost savings.
Information regarding the operations, sales and profitability of the Company,
plus information regarding foreign and domestic operations and sales by product
categories, is included in Note N of the Company's consolidated financial
statements in the Company's Annual Report to Shareholders for the fiscal year
ended January 2, 1999 ("1998 Annual Report"), which information is incorporated
herein by reference.
JEANSWEAR COALITION
The Jeanswear Coalition includes the Company's jeanswear and related casual
apparel products for the North and South American markets.
Jeanswear products are manufactured and marketed under the LEE(R), WRANGLER(R),
RUSTLER(R), RIDERS(R) and BRITTANIA(R) brands in the United States and the LEE
and WRANGLER brands in Canada and Mexico. The Company also offers cotton casual
pants and shirts under the LEE CASUALS(R) and TIMBER CREEK BY WRANGLER(R)
brands.
In domestic markets, LEE branded products are sold through department and
specialty stores. WRANGLER westernwear is marketed through western specialty
stores, and other WRANGLER brand products are sold primarily through the mass
merchant and discount store channels. The RUSTLER and
3
RIDERS brands are marketed to national and regional discount chains. Sales for
all brands are generally made directly to retailers through full-time
salespersons.
According to industry data, approximately 639 million pairs of jeans made of
denim, twill, corduroy and other fabrics were sold in the United States in 1998,
representing an increase of 7.9% over 1997. This same data indicates that the
Company currently has the largest combined unit market share at approximately
26%, with the WRANGLER, LEE and RUSTLER brands having the second, third and
fourth largest unit shares of the jeans market in the United States,
respectively.
Also beginning in 1997, the Company began the process of converting certain
licensed operations in South America into owned operations. As of early 1999,
the Company manufactures and markets the WRANGLER and LEE brands in Brazil and
Chili. These products are sold through department and specialty stores. The
Company expects to continue its expansion into other countries in South
America.
WORKWEAR COALITION
A new Workwear Coalition was created at the beginning of 1999 for the Company's
occupational apparel products. These products were previously part of the
Jeanswear Coalition.
The Company is a leading producer of occupational and career apparel sold under
the RED KAP(R) label. Approximately three-fourths of sales are to industrial
laundries that in turn supply work clothes to employers, primarily on a rental
basis, for on-the-job wear by production, service and white-collar personnel.
Products include work pants, slacks, work and dress shirts, overalls, jackets
and smocks. Because industrial laundries maintain minimal inventories of work
clothes, a supplier's ability to offer rapid delivery is an important factor in
this market. The Company's commitment to customer service, supported by an
automated central distribution center with several satellite locations, has
enabled customer orders to be filled within 24 hours of receipt and has helped
the RED KAP brand obtain a significant share of the industrial laundry rental
business.
In addition, the Company markets safety apparel in the United States and Canada
under the BULWARK(R) brand. In 1998 the Company expanded into restaurant
apparel and linen products with the acquisition of Penn State Textile Mfg.,
Inc.
INTIMATE APPAREL COALITION
The Intimate Apparel Coalition includes the Company's intimate apparel
businesses in the United States, along with the Company's swimwear, casual
sportswear and daypack businesses.
In women's intimate apparel, the Company manufactures and markets bras, panties,
daywear, shapewear, robes and sleepwear products under the VANITY FAIR(R) label
for sales to domestic department and specialty stores. During 1999, the Company
will introduce a line of sports bras under the licensed NIKE(R) label. Bras,
panties, daywear and shapewear are manufactured under the VASSARETTE(R) brand
for sales to the discount store channel. The Company also has a significant
private label lingerie business in the United States. Most products are sold
through the Company's sales force. In January 1998, the Company expanded its
domestic intimate apparel presence with the
4
acquisition of Bestform Group, Inc., which included the LILY OF FRANCE(R) and
licensed OSCAR DE LA RENTA(R) brands sold through department stores and the
BESTFORM(R) and EXQUISITE FORM(R) brands sold through the discount store channel
of distribution.
The Company designs, manufactures and markets an extensive line of women's
swimwear and sportswear, including coordinated tops and bottoms, under the
JANTZEN(R) trademark and under the licensed NIKE label. Products are sold
primarily to department and specialty stores in the United States and Canada
through the Company's sales force. The JANTZEN trademark is licensed to other
companies in several foreign countries.
The Company manufactures and markets JANSPORT(R) brand daypacks sold through
department and sports specialty stores and college bookstores and WOLF CREEK(R)
brand daypacks through discount stores. JANSPORT daypacks and bookbags have the
leading brand share in the United States. JANSPORT branded fleece casualwear and
T-shirts imprinted with college logos are sold through college bookstores. In
addition, JANSPORT backpacking and mountaineering gear is sold through outdoor
and sporting goods stores.
KNITWEAR COALITION
The Knitwear Coalition includes the manufacturing and marketing of knitted
fleecewear and T-shirts. Blank fleece and T-shirt products are marketed under
the LEE brand to wholesalers and garment screen print operators. Approximately
40% of knitwear sales are for private label accounts, including NIKE, Inc. and
various national chain, department and discount stores.
The Company also designs, manufactures and markets imprinted sports apparel
under licenses granted by the four major American professional sports leagues,
NASCAR and other parties. LEE SPORT(R), NUTMEG(R) and CHASE AUTHENTICS(R)
branded adult licensed apparel is distributed through department, sporting goods
and athletic specialty stores. CSA(R) branded products, primarily in children's
sizes, are distributed through mass merchandisers and discount stores.
PLAYWEAR COALITION
The Playwear Coalition consists of infant and children's apparel manufactured
and marketed under the HEALTHTEX(R) brand and under the licensed NIKE(R) brand.
Products are sold primarily to department and specialty stores. During 1998, the
Company discontinued sales of playwear and sleepwear products imprinted with
characters and images licensed from The Walt Disney Company and others.
INTERNATIONAL COALITION
The International Coalition consists of the Company's jeanswear, daypack and
intimate apparel businesses outside of North and South America. The largest
component is the jeanswear operation in Europe, where the Company manufactures
and markets LEE, WRANGLER, MAVERICK(R) and OLD AXE(R) jeanswear and related
products. Jeanswear in Europe is more of a fashion product and has a higher
relative price than similar products in the United States. Sales are primarily
in Western Europe, but with increasing sales in Eastern Europe. LEE and
WRANGLER jeanswear products are sold through department stores and specialty
shops, while the MAVERICK and OLD AXE brands are sold to discount stores.
Jeanswear products are sold to retailers through the Company's sales forces and
independent
5
sales agents. LEE and WRANGLER jeanswear and related products are
marketed through distributors, agents or licensees in foreign markets where the
Company does not have owned operations. During 1998, the Company acquired the
formerly licensed WRANGLER business in Japan and the formerly licensed LEE and
WRANGLER business in Turkey. The Company also manufactures and markets LEE
products in China and participates in a joint venture in Spain and Portugal.
JANSPORT branded daypacks and bookbags are marketed in Europe to department and
specialty stores.
The Company manufactures and markets women's intimate apparel and swimwear in
Europe. Intimate apparel is marketed in department and specialty stores under
the LOU(R) and BOLERO(R) brand names primarily in France and under the GEMMA(R),
INTIMA CHERRY(R) and BELCOR(R) brands in Spain. Intimate apparel is marketed in
discount stores in France under the VARIANCE(R), CARINA(R) and SILTEX(R) brands.
RAW MATERIALS AND MANUFACTURING
Raw materials include fabrics made from cotton, synthetics and blends of cotton
and synthetic yarn. For most domestic operations, the Company purchases fabric,
primarily from several domestic suppliers, against scheduled production. The
Company also purchases thread and trim (buttons, zippers, snaps and lace) from
numerous suppliers.
For domestic operations, purchased fabric is cut and sewn into finished
garments in owned domestic and offshore manufacturing facilities. In addition,
the Company contracts the sewing of products from independent contractors,
primarily in foreign countries. To obtain a more balanced sourcing mix, an
increasing percentage of production is in lower cost offshore plants,
primarily in Mexico and the Caribbean Basin. By the end of 1998, approximately
57% of domestic sales were derived from products sewn outside the United
States.
In the Company's domestic knitwear and a portion of its intimate apparel
businesses, operations are vertically integrated and include the entire process
of converting yarn into finished garments. The Company knits purchased yarn into
fabric in its facilities. The knit fabric is then dyed, finished and cut in
domestic facilities before it is sewn into finished garments. Cotton yarn and
cotton and synthetic blend yarn are purchased from a major textile company under
a long-term supply agreement for the knitwear operations. Yarn is available from
numerous other sources.
In the Company's International Coalition, fabric, thread and trim are purchased
from several international suppliers. In the European jeanswear operations,
fabric is cut and sewn into finished garments in owned plants in the United
Kingdom, Malta, Poland and Turkey, with the balance (mostly tops) sourced from
independent contractors. In intimate apparel, fabric is sewn into finished
garments in owned plants in France, Spain and Tunisia, with the remainder
manufactured by independent contractors. To obtain a more balanced sourcing mix,
jeanswear and intimate apparel sourcing is being shifted from owned plants in
Western Europe to lower cost owned and contracted production outside of Western
Europe. At the end of 1998, approximately 50% of international sales were
derived from Company-owned plants.
The Company has not experienced difficulty in obtaining fabric and other raw
materials to meet production needs during 1998 and does not anticipate
difficulties in 1999. The loss of any one supplier would not have a significant
adverse effect on the Company's business.
6
SEASONALITY
The apparel industry in the United States has four primary retail selling
seasons -- Spring, Summer, Back-to-School and Holiday, while international
markets typically have Spring and Fall selling seasons. Sales to retailers
generally precede the retail selling seasons, although demand peaks have been
reduced in recent years as more products are being sold on a replenishment
basis.
Overall, with its diversified product offerings, the Company's operating results
are not highly seasonal. On a quarterly basis, consolidated net sales range from
a low of approximately 23% of full year sales in the first quarter or second
quarter to a high of 27% in the third quarter. Sales in the Knitwear Coalition,
however, are more seasonal in nature, with approximately 60% of its sales of
fleece and T-shirt products in the second half of the year.
Working capital requirements vary throughout the year. Working capital increases
during the first half of the year as inventory builds to support peak shipping
periods, and accordingly decreases during the second half. Cash provided by
operations is substantially higher in the second half of the year due to higher
net income and reduced working capital requirements during that period.
ADVERTISING
The Company supports its brands through extensive advertising and promotional
programs and through sponsorship of special events. The Company advertises on
national and local radio and television and in consumer and trade publications.
It also participates in cooperative advertising on a shared cost basis with
major retailers in radio, television and various print media. In addition,
point-of-sale fixtures and signage are used to promote products at the retail
level. The level of promotional spending has increased in recent years as the
Company has invested a portion of the savings from the coalition consolidations
and other cost saving actions in increased advertising and market research to
support and build the Company's brands. During 1998, the Company spent $287
million advertising and promoting its products.
OTHER MATTERS
COMPETITIVE FACTORS
The apparel industry is highly competitive and consists of a number of domestic
and foreign companies. Management believes that there are only two competitors
in the United States that have consolidated assets and sales greater than those
of the Company. However, in certain product categories in which the Company
operates, there are several competitors that have more assets and sales than the
Company in those categories.
TRADEMARKS AND LICENSES
Trademarks are of material importance to all of the Company's marketing efforts.
Company-owned brands are protected by registration or otherwise in the United
States and most other markets where the Company's brands are sold. These
trademark rights are enforced and protected by litigation against infringement
as necessary. The Company has granted licenses to other parties to manufacture
and sell products under the Company's trademarks in product categories and in
geographic areas in which the Company does not operate.
7
In some instances, the Company pays a royalty to use the trademarks of others.
Apparel is manufactured and marketed under licenses granted by Major League
Baseball, the National Basketball Association, the National Football League, the
National Hockey League, NIKE, Inc. and others. Some of these license
arrangements are for a short term and may not contain specific renewal options.
Management believes that loss of any license would not have a material adverse
effect on the Company.
CUSTOMERS
The Company's customers are primarily department, mass merchant, specialty and
discount stores in the United States and in international markets, primarily in
Europe. Sales to Wal-Mart Stores, Inc. totaled 12.3% of total sales in 1998 and
11.1% in 1997. Sales to the Company's ten largest customers amounted to 41% of
total sales in 1998 and 38% in 1997.
EMPLOYEES
The Company employs approximately 70,000 men and women. Approximately 5,600
employees are covered by various collective bargaining agreements. Employee
relations are considered to be good.
BACKLOG
The dollar amount of backlog of orders believed to be firm as of any fiscal
year-end is not material for an understanding of the business of the Company
taken as a whole.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included in Item 1 - "Business" and Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
"forward-looking statements" within the meaning of the federal securities laws.
This includes any statements concerning plans and objectives of management
relating to the Company's operations or economic performance, and assumptions
related thereto. In addition, the Company and its representatives may from time
to time make other oral or written statements that are also forward-looking
statements.
These forward-looking statements are made based on management's expectations and
beliefs concerning future events impacting the Company and therefore involve a
number of risks and uncertainties. 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 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; the financial strength of
the retail industry; actions of competitors that may impact the Company's
business; the Company's ability, and the ability of its suppliers and customers,
to adequately address the Year 2000 computer issue; and the impact of unforeseen
economic changes in the markets where the Company competes, such as changes in
interest rates, currency exchange rates, inflation rates, recession, and other
external economic and political factors over which the Company has no control.
8
ITEM 2. PROPERTIES.
The Company owns most of its facilities used in manufacturing, distribution and
administrative activities. Certain other facilities are leased under operating
leases that generally contain renewal options. Management believes all
facilities and machinery and equipment are in good condition and are suitable
for the Company's needs. Manufacturing and distribution facilities being
utilized at the end of 1998 are summarized below:
Square
Footage
----------
United States 16,600,000
Mexico and Caribbean Basin 3,100,000
Other international, primarily Europe 2,700,000
----------
22,400,000
==========
In addition, the Company owns or leases various administrative and office space
having 1,400,000 square feet of space and owns or leases facilities having
2,900,000 square feet that are used for factory outlet operations. Approximately
75% of the factory outlet space is used for selling and warehousing the
Company's products, with the balance consisting of space leased to tenants and
common areas. Finally, the Company owns facilities having 400,000 square feet of
space formerly used in its operations but now leased to other parties or held
for sale.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party to litigation arising in the ordinary course of its
business. In management's opinion, there are no pending claims or litigation,
the outcome of which would have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The following are the executive officers of VF Corporation as of March 2, 1999.
The term of office of each of the executive officers continues to the next
annual meeting of the Board of Directors to be held April 20, 1999. There is no
family relationship among any of the VF Corporation executive officers.
9
Period Served
Name Position Age In Such Office(s)
- ---- -------- --- -----------------
Mackey J. McDonald Chairman of the Board 52 October 1998 to date
President October 1993 to date
Chief Executive Officer January 1996 to date
Director October 1993 to date
Candace S. Cummings Vice President - Administration 51 March 1996 to date
& General Counsel
Secretary October 1997 to date
Timothy A. Lambeth Vice President - Global Processes 57 February 1999 to date
Terry L. Lay Vice President and Chairman - 51 February 1999 to date
International Coalition
Daniel G. MacFarlan Vice President 48 April 1995 to date
Chairman - Knitwear, Playwear July 1996 to date
& Intimate Apparel Coalitions
Frank C. Pickard III Vice President - Treasurer 54 April 1994 to date
John P. Schamberger Chairman - North and South 50 February 1995 to date
America Jeanswear &
Workwear Coalitions
Vice President April 1995 to date
Robert K. Shearer Vice President - Finance and 47 July 1998 to date
Chief Financial Officer
Timothy R. Wheeler Vice President - Controller 44 August 1998 to date
Mr. McDonald joined the Company's Lee division in 1983, serving in various
management positions until his election as Executive Vice President of the
Wrangler division in 1986 and President of Wrangler in 1988. He was named Group
Vice President of the Company in 1991, President of the Company in October 1993,
Chief Executive Officer in January 1996 and Chairman of the Board in October
1998. Additional information is included on page 2 of the 1999 Proxy Statement.
Mrs. Cummings joined the Company as Vice President - General Counsel in January
1995 and became Vice President - Administration & General Counsel in March 1996
and Secretary in October 1997. Previously, she had been a senior business
partner at the international law firm of Dechert Price & Rhoads where she had
been employed since 1972.
10
Mr. Lambeth joined the Company in 1968 and has served in various finance,
administrative and marketing positions. He served as president of the Company's
Healthtex division from 1991 to 1992 and president of Lee Company from 1992 to
July 1996. He was elected a Vice President of the Company in July 1996,
President - European & Asian Operations in August 1996 and Vice President -
Global Processes in February 1999.
Mr. Lay joined the Company's Lee division in March 1971 and held various
positions at both the Lee and Jantzen divisions, including Vice President -
Product Development at the Lee division from June 1992 to April 1994. In May
1994, he was appointed President - Wrangler Europe and in November 1994
President - VF Europe. He served as President of the Company's Lee division from
August 1996 until he was elected Vice President of the Company and Chairman -
International Coalition in February 1999.
Mr. MacFarlan joined the Company's Jantzen division in 1978 and served in
various marketing and administrative capacities. He served as President of the
Company's VF Factory Outlet division from October 1993 to February 1995. He was
elected as President of the Company's Nutmeg division in November 1994 and was
elected as the Company's Chairman - Decorated Knitwear & Playwear Coalitions in
February 1995, which was expanded in July 1996 to Chairman - Knitwear, Playwear
& Intimate Apparel Coalitions, and Vice President in April 1995.
Mr. Pickard joined the Company in 1976 and was elected Assistant Controller in
1982, Assistant Treasurer in 1985, Treasurer in 1987 and Vice President -
Treasurer in April 1994.
Mr. Schamberger joined the Company's Wrangler division in 1972 and held various
positions until his election as President of Wrangler in 1992. He was elected as
the Company's Chairman - North and South America Jeanswear & Workwear Coalitions
in February 1995 and Vice President in April 1995.
Mr. Shearer joined the Company in 1986 as Assistant Controller and was elected
Controller in 1989, Vice President - Controller in April 1994 and Vice President
- - Finance and Chief Financial Officer in July 1998.
Mr. Wheeler joined the Company in May 1995 as Vice President - Finance for the
Jantzen division. He served as Financial Director - Wrangler Europe from January
1997 until his appointment as Vice President - International Shared Services in
January 1998. In August 1998, he was elected Vice President - Controller of the
Company. Prior to joining the Company, Mr. Wheeler had been employed by J.E.
Morgan Knitting Mills, Inc. as Vice President - Finance and Chief Financial
Officer from June 1994 to April 1995 and prior thereto as Vice President -
Business Operations.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information concerning the market and price history of the Company's Common
Stock, plus dividend information, as reported under the caption "Quarterly
Results of Operations" on page 22 and under the captions "Investor Information -
Common Stock, Shareholders of Record, Dividend Policy,
11
Dividend Reinvestment Plan, Dividend Direct Deposit and Quarterly Common Stock
Price Information" on page 37 of the 1998 Annual Report, is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the Company for each of its last five fiscal years
under the caption "Financial Summary" on pages 34 and 35 of the 1998 Annual
Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
A discussion of the Company's financial condition and results of operations is
incorporated herein by reference to pages 18 to 21 of the 1998 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements of the Company and specific supplementary financial
information are incorporated herein by reference to pages 22 through 33 of the
1998 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information under the caption "Election of Directors" on pages 2 through 5 of
the 1999 Proxy Statement is incorporated herein by reference. See Item 4A with
regard to Executive Officers.
Information under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 31 of the 1999 Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information on pages 11 through 17 of the 1999 Proxy Statement is incorporated
herein by reference.
12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information under the caption "Certain Beneficial Owners" on page 18 and "Common
Stock Ownership of Management" on page 19 of the 1999 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information under the caption "Election of Directors" with respect to Mr.
Crutchfield on page 3 and with respect to Messrs. Hurst and Sharp on page 4 of
the 1999 Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial statements - Included on pages 23 through 33 of the
1998 Annual Report (Exhibit 13) and incorporated by reference in Item 8:
Consolidated statements of income - - Fiscal years ended January 2, 1999,
January 3, 1998 and January 4, 1997
Consolidated statements of comprehensive income - - Fiscal years ended
January 2, 1999, January 3, 1998 and January 4, 1997
Consolidated balance sheets - - January 2, 1999 and January 3, 1998
Consolidated statements of cash flows - - Fiscal years ended January 2,
1999, January 3, 1998 and January 4, 1997
Consolidated statements of common shareholders' equity - - Fiscal years
ended January 2, 1999, January 3, 1998 and January 4, 1997
Notes to consolidated financial statements
Report of independent accountants
13
2. Financial statement schedules - The following consolidated
financial statement schedule is included herein:
Schedule II - - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore
have been omitted.
3. Exhibits
Number Description
3 Articles of incorporation and bylaws:
(A) Articles of Incorporation, as amended and restated as of April
18, 1986 (Incorporated by reference to Exhibit 3(A) to Form
10-K for the fiscal year ended January 4, 1992)
(B) Articles of Amendment amending Article Fifth of the Amended
and Restated Articles of Incorporation (Incorporated by
reference to Exhibit 3(B) to Form 10-Q for the quarter ended
March 4, 1998)
(C) Statement with Respect to Shares of Series B ESOP Convertible
Preferred Stock (Incorporated by reference to Exhibit 4.2 to
Form 8-K dated January 22, 1990)
(D) Articles of Amendment with Respect to Designation of Series A
Participating Cumulative Preferred Stock (Incorporated by
reference to Exhibit 3(C) to Form 10-K for the fiscal year
ended January 3, 1998)
(E) Bylaws, as amended through January 1, 1996 and as presently in
effect (Incorporated by reference to Exhibit 3(D) to Form 10-K
for the fiscal year ended December 30, 1995)
4 Instruments defining the rights of security holders, including
indentures:
(A) A specimen of the Company's Common Stock certificate
(Incorporated by reference to Exhibit 3(C) to Form 10-K for
the fiscal year ended January 3, 1998)
(B) A specimen of the Company's Series B ESOP Convertible
Preferred Stock certificate (Incorporated by reference to
Exhibit 4(B) to Form 10-K for the fiscal year ended December
29, 1990)
(C) Indenture between the Company and Morgan Guaranty Trust
Company of New York, dated January 1, 1987 (Incorporated by
reference to Exhibit 4.1 to Form S-3 Registration No.
33-10939)
(D) First Supplemental Indenture between the Company, Morgan
Guaranty Trust Company of New York and United States Trust
Company of New York, dated September 1, 1989 (Incorporated by
reference to Exhibit 4.3 to Form S-3 Registration No.
33-30889)
14
(E) Second Supplemental Indenture between the Company and United
States Trust Company of New York as Trustee (Incorporated by
reference to Exhibit 4.1 to Form 8-K dated April 6, 1994)
(F) Rights Agreement, dated as of October 22, 1997, between the
Company and First Chicago Trust Company of New York
(Incorporated by reference to Exhibit 1 to Form 8-A dated
January 23, 1998)
10 Material contracts:
*(A) 1982 Stock Option Plan (Incorporated by reference to Exhibit
4.1.1 of Post-Effective Amendment No. 1 to Form S-8/S-3
Registration No. 33-26566)
*(B) 1991 Stock Option Plan (Incorporated by reference to Exhibit A
to the 1992 Proxy Statement dated March 18, 1992)
*(C) 1995 Key Employee Restricted Stock Plan (Incorporated by
reference to Exhibit 10(U) to Form 10-K for the fiscal year
ended December 30, 1995)
*(D) 1996 Stock Compensation Plan (Incorporated by reference to
Exhibit A to the 1997 Proxy Statement dated March 10, 1997)
*(E) Annual Discretionary Management Incentive Compensation Program
(Incorporated by reference to Exhibit 10(C) to Form 10-K for
the fiscal year ended January 4, 1992)
*(F) Deferred Compensation Plan (Incorporated by reference to
Exhibit 10(B) to Form 10-K for the fiscal year ended December
29, 1990)
*(G) Executive Deferred Savings Plan (Incorporated by reference to
Exhibit 10(E) to Form 10-K for the fiscal year ended January
4, 1992)
*(H) Amended and Restated Supplemental Executive Retirement Plan,
dated May 16, 1989 (Incorporated by reference to Exhibit 10(F)
to Form 10-K for the fiscal year ended December 31, 1994)
*(I) Second Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan for
Mid-Career Senior Management (Incorporated by reference to
Exhibit 10(H) to Form 10-K for the fiscal year ended December
31, 1994)
*(J) Third Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan for Senior
Management (Incorporated by reference to Exhibit 10(I) to Form
10-K for the fiscal year ended December 31, 1994)
*(K) Fourth Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan for
Participants in the Company's Deferred Compensation Plan
(Incorporated by reference to Exhibit 10(J) to Form 10-K for
the fiscal year ended December 31, 1994)
15
*(L) Fifth Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan which
funds certain benefits upon a Change in Control (Incorporated
by reference to Exhibit 10(K) to Form 10-K for the fiscal year
ended December 31, 1994)
*(M) Seventh Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan for
Participants in the Company's Executive Deferred Savings Plan
(Incorporated by reference to Exhibit 10(L) to Form 10-K for
the fiscal year ended December 31, 1994)
*(N) Eighth Amended Annual Benefit Determination under the Amended
and Restated Supplemental Executive Retirement Plan for
Participants whose Pension Plan Benefits are limited by the
Internal Revenue Code (Incorporated by reference to Exhibit
10(M) to Form 10-K for the fiscal year ended December 31,
1994)
*(O) Resolution of the Board of Directors dated December 3, 1996
relating to lump sum payments under the Company's Supplemental
Executive Retirement Plan (Incorporated by reference to
Exhibit 10(N) to Form 10-K for the fiscal year ended January
4, 1997)
*(P) Form of Change in Control Agreement with senior management of
the Company (Incorporated by reference to Exhibit 10(J) to
Form 10-K for the fiscal year ended December 29, 1990)
*(Q) Form of Change in Control Agreement with other management of
the Company (Incorporated by reference to Exhibit 10(K) to
Form 10-K for the fiscal year ended December 29, 1990)
*(R) Form of Change in Control Agreement with management of
subsidiaries of the Company (Incorporated by reference to
Exhibit 10(L) to Form 10-K for the fiscal year ended December
29, 1990)
(S) Revolving Credit Agreement, dated October 20, 1994
(Incorporated by reference to Exhibit 10(Q) to Form 10-K for
the fiscal year ended December 31, 1994)
*(T) Executive Incentive Compensation Plan (Incorporated by
reference to Exhibit 10(R) to Form 10-K for the fiscal year
ended December 31, 1994)
*(U) Restricted Stock Agreement (Incorporated by reference to
Exhibit 10(S) to Form 10-K for the fiscal year ended December
31, 1994)
*(V) Discretionary Supplemental Executive Bonus Plan (Incorporated
by reference to Exhibit 10(T) to Form 10-K for the fiscal year
ended December 31, 1994)
*(W) VF Corporation Deferred Savings Plan for Non-Employee
Directors (Incorporated by reference to Exhibit 10(W) to Form
10-K for the fiscal year ended January 4, 1997)
16
*(X) Mid-Term Incentive Plan, a subplan under the 1996 Stock
Compensation Plan
* Management compensation plans
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consents of PricewaterhouseCoopers LLP
23.2 Report of PricewaterhouseCoopers LLP
24 Power of attorney
27 Financial data schedule
99 Additional exhibits:
(A) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for
Salaried Employees for the year ended December 31, 1998
(B) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for
Hourly Employees for the year ended December 31, 1998
(C) Form 11-K for Blue Bell Savings, Profit Sharing and Retirement
Plan for the year ended December 31, 1998
All other exhibits for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of the
fiscal year ended January 2, 1999.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
V.F. CORPORATION
By: /s/ Mackey J. McDonald
------------------------------
Mackey J. McDonald
Chairman of the Board
President
(Chief Executive Officer)
By: /s/ Robert K. Shearer
------------------------------
Robert K. Shearer
Vice President - Finance
(Chief Financial Officer)
By: /s/ Timothy R. Wheeler
------------------------------
Timothy R. Wheeler
Vice President - Controller
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated:
Robert D. Buzzell* Director
Edward E. Crutchfield* Director
Ursula F. Fairbairn* Director
Barbara S. Feigin* Director
George Fellows* Director
Robert J. Hurst* Director March 29, 1999
Mackey J. McDonald* Director
William E. Pike* Director
M. Rust Sharp* Director
L. Dudley Walker Director
* By: /s/ C. S. Cummings March 29, 1999
--------------------------------
C. S. Cummings, Attorney-in-Fact
18
VF CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------------------------------------------
ADDITIONS
(1) (2)
---------------------------
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts Deductions End of
Description of Period Expenses Describe Describe Period
- ----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Fiscal year ended January 2, 1999
Allowance for doubtful accounts $39,576 $20,802 $ 8,367 (A) $52,011
======= ======= ====== =======
Valuation allowance for deferred
income tax assets $32,506 $ 7,984 6,241 (B) $34,249
======= ======= ====== =======
Fiscal year ended January 3, 1998
Allowance for doubtful accounts $40,253 $16,205 $16,882 (A) $39,576
======= ======= ====== =======
Valuation allowance for deferred
income tax assets $29,296 $ 5,337 $ 2,127 (B) $32,506
======= ======= ====== =======
Fiscal year ended January 4, 1997
Allowance for doubtful accounts $34,621 $18,490 $12,858 (A) $40,253
======= ======= ====== =======
Valuation allowance for deferred
income tax assets $22,154 $ 9,874 $2,732 (B) $29,296
======= ======= ====== =======
(A) Deductions include accounts written off, net of recoveries.
(B) Deduction relates to circumstances where it is more likely than not that
deferred tax assets will be realized.
19
VF CORPORATION
INDEX TO EXHIBITS
Number Description
- ------ -----------
10 Material Contracts:
(X) Mid-Term Incentive Plan, a subplan under the 1996 Stock Compensation
Plan
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consents of PricewaterhouseCoopers LLP
23.2 Report of PricewaterhouseCoopers LLP
24 Power of attorney
27 Financial data schedule
99 Additional exhibits:
(A) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for
Salaried Employees for the year ended December 31, 1998
(B) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for Hourly
Employees for the year ended December 31, 1998
(C) Form 11-K for Blue Bell Savings, Profit Sharing and Retirement Plan
for the year ended December 31, 1998