Exhibit 13 VF Corporation Management's Discussion and Analysis of Operations and Financial Condition Analysis of Operations The Company's record sales and earnings over the last three years reflect the successful results from investments in our product categories targeted for growth and improvement in our businesses focused on enhancing profitability. The decisions to balance our manufacturing base with lower cost offshore locations and to reorganize the Company into six product-based coalitions have resulted in cost reductions and increased efficiency in both domestic and international businesses. We have reinvested a significant portion of the savings from these actions in (1) promotional spending to support and build our brands, (2) investments in technology and (3) expansion of our offshore manufacturing base. Finally, the acquisition of Bestform Group, Inc. in 1998, the conversion of licensed international businesses into owned businesses, and other domestic and international business acquisitions have also contributed to the improved operating results. The Company classifies all of its businesses into two categories: a "growth" category where investments are made to support top line growth and a "maintenance" category where efforts are focused on increased profitability. In the growth category businesses, which include jeanswear, domestic intimate apparel, workwear and daypacks, sales advanced by $456 million in 1998, including acquisitions. The rate of sales increase in this category was 12% over 1997. Sales in the Company's maintenance category, which includes our knitwear, international intimates, playwear and swimwear businesses, declined by $199 million in 1998 due to lower sales of knitwear products and the elimination of unprofitable product lines. Net sales in 1997 increased by 2% over 1996. Unit sales in 1997 increased by 1% over 1996, and the impact of changes in product mix and pricing increased sales by 2%. Offsetting these increases was the impact of a stronger U.S. dollar in 1997, which in translating foreign currencies into U.S. dollars had the effect of reducing total sales by 1% (and earnings by $.07 per share). Gross margins were 34.5% of sales in 1998, compared with 34.1% in 1997 and 32.7% in 1996. The margin improvement over the last two years resulted from the continuing shift to lower cost sourcing, lower raw material costs and increased operating efficiencies. For the United States market, VF manufactures its products in owned domestic plants and offshore plants, primarily in Mexico. In addition, VF contracts the sewing of products from independent contractors mostly located outside of the U.S. There has been a shift over the last three years toward a more balanced sourcing mix, with more products being manufactured in and contracted from lower cost facilities in Mexico and the Caribbean Basin. The amount of domestic sales derived from products sewn outside the United States has increased to 57% by the end of 1998 from approximately 30% during 1995. Similarly, in foreign markets, sourcing is being shifted from higher cost owned plants located primarily in Western Europe to lower cost owned and contracted production in locations outside of Western Europe. Marketing, administrative and general expenses were 21.9% of sales in 1998, compared with 22.5% and 21.8% in 1997 and 1996, respectively. Expenses declined as a percent of sales in 1998 due to the benefits of the coalition consolidations and other cost reduction initiatives, partially offset by higher spending on information systems. The increase in 1997 resulted from higher marketing spending, primarily advertising, compared with 1996. Other operating income and expense includes goodwill amortization expense, offset by net royalty income. Amortization of goodwill increased in 1998 primarily from acquisitions completed during the year, and net royalty income declined in 1998 from the conversion of certain formerly licensed businesses to owned operations. Net interest expense increased in 1998 due to higher short-term borrowings related to the 1998 business acquisitions. In addition, interest income includes $10.5 million in 1997 and $2.6 million in 1996 relating to settlements of prior years' tax examinations. The effective income tax rate was 38.5% in 1998, 40.1% in 1997 and 41.1% in 1996. The effective rate declined in 1998 and 1997 due to a reduction in foreign operating losses with no current tax benefit. Also in 1998, the effective rate was reduced by lower state income taxes and higher tax-free income from investments funding compensation plans. Analysis of Financial Condition In managing its capital structure, VF balances financial leverage with equity to reduce its overall cost of capital, while providing the flexibility to pursue investment opportunities that may become available. It is management's goal to maintain a debt to capital ratio of less than 40%. Our debt to capital ratio remains within these guidelines: 27.1% at the end of 1998 and 22.5% at the end of 1997. Balance Sheets Increases in accounts receivable and inventories at the end of 1998 result primarily from the 1998 acquisitions. In addition, the increase in inventories reflects a higher average cost per unit due to a higher fashion content. Intangible assets and short-term borrowings increased during 1998 due to the acquisitions completed during the year. Liquidity and Cash Flow Working capital was $815.1 million and the current ratio was 1.8 to 1 at the end of 1998, compared with $835.6 million and 2.1 to 1 at the end of 1997. Cash provided by operations was $432.7 million in 1998, $454.7 million in 1997 and $711.5 million in 1996. The record level in 1996 resulted from reductions in accounts receivable due to the timing of the year-end, historically low inventory levels and an increase in current liabilities during 1996. Capital expenditures were $189.1 million in 1998, compared with $154.3 million and $138.7 million in 1997 and 1996, respectively. Capital expenditures relate to expansion of offshore manufacturing capacity and investments in information systems. Capital expenditures in 1999 are expected to remain at the 1998 level and are expected to be funded by cash flows from operations. Beginning in late 1994 and continuing through 1998, the Company purchased 19.0 million shares of its Common Stock in open market transactions. During 1998, 3.2 million shares were purchased at a cost of $147.4 million, and 9.1 million shares were purchased during 1997 for $391.7 million. Under its current authorization from the Board of Directors, the Company may purchase up to an additional 2.0 million shares. Cash dividends totaled $.81 per common share in 1998, compared with $.77 in 1997 and $.73 in 1996. The dividend payout rate was 26% in 1998, compared with 28% in 1997 and 31% in 1996. The indicated annual dividend rate for 1999 is $.84 per share. VF has paid dividends on its Common Stock annually since 1941 and intends to maintain a long-term payout rate of 30%. The Company's strong financial position, including existing cash balances, unused credit lines and a low debt ratio, provides substantial capacity to meet investment opportunities that may arise. Foreign Currency Exposures Over 16% of our 1998 sales and operating income were derived from foreign operations. In addition, a growing percentage of the total product needs to support our domestic businesses are manufactured in foreign countries. VF's financial position and operating results can be influenced by economic conditions in countries where VF conducts business and by changing foreign currency exchange rates. Management monitors foreign currency exposures and may in the ordinary course of business enter into foreign currency forward exchange contracts related to specific foreign currency transactions or anticipated cash flows. These contracts are generally for periods of less than six months and are not material. VF does not hedge the translation of foreign currencies into the U.S. dollar. A new common currency, the Euro, was created effective January 1, 1999 to eventually replace eleven separate currencies of countries within the European Union. The introduction of the Euro is not expected to have a significant impact on the Company's operating results. Year 2000 Update The Year 2000 issue relates to computer systems that will not properly recognize date-sensitive information when the year changes to 2000. A Year 2000 issue that is not properly addressed could result in a system failure or miscalculations. While the Company's products are not directly affected by the Year 2000 problem, its computer systems and equipment, as well as the systems and equipment of its vendors, service providers and customers, may be affected. Senior management of the Company has established a task force to address Year 2000 issues and regularly reviews its progress with the Board of Directors. The task force activities relate to four broad business categories: (1) infrastructure; (2) applications software; (3) processors embedded in machinery and equipment used in the Company's manufacturing, distribution and administrative operations; and (4) significant third party vendors, service providers and customers. Actions common to evaluation of Year 2000 issues in each of these business categories include: - - Inventorying all date-sensitive systems and equipment - - Assessing compliance and assigning priorities to items identified as not being compliant - - Repairing or replacing items identified as not being compliant - - Testing converted systems and equipment Infrastructure: This category relates to all mainframe, personal computer and network hardware, as well as operating system software. Approximately 75% of the actions required for this category have been completed at January 2, 1999. All such components are expected to be fully compliant during the second quarter of 1999. The testing phase is ongoing as hardware or system software is remediated, upgraded or replaced and is scheduled to be completed during the second quarter of 1999. Applications software: This refers to all computer software programs, whether internally developed or purchased from outside parties. Approximately 90% of such software systems are compliant at January 2, 1999, and all software is expected to be fully compliant during the second quarter of 1999. The testing phase has begun and is scheduled to be completed for all critical applications during the second quarter of 1999. Processors: The Company is currently taking an inventory of all processors embedded in the Company's manufacturing, distribution and administrative equipment. This assessment is expected to be completed during the first quarter of 1999. As Year 2000 issues are noted, the hardware or software is remediated, upgraded or replaced. The testing phase is ongoing and is scheduled to be completed during the second quarter of 1999. Third Parties: The Company has initiated formal communications with all of its significant vendors, service providers and customers to determine the extent to which the Company is vulnerable to those third parties' failure to remediate their own Year 2000 issues. The communication and evaluation process is ongoing and will include visits to certain critical third parties through the second quarter of 1999. In addition, contingency plans are being developed and will evolve as the testing phase and third party assessments are completed. Although the Company expects its critical systems to be compliant by the middle of 1999, it is possible that all Year 2000 problems may not be identified or corrected or that third parties with which the Company has significant relationships will not resolve all of their Year 2000 issues. However, with the investigation and remediation of Year 2000 issues as scheduled, the Company expects to reduce significantly the level of uncertainty about the Year 2000 problem and, in particular, about the Year 2000 compliance and readiness of its material third party relationships. Also, since the Company conducts business with numerous vendors, has numerous manufacturing and distribution facilities around the world and has a broad customer base, the Company believes that the possibility of significant interruptions of normal operations should be reduced. Nevertheless, if there were serious systems failures by the Company or its third party relationships, they could have a material adverse effect on the Company's financial position or results of operations. The estimated total cost of resolving the Year 2000 issues, including internal personnel and outside vendors and consultants, is approximately $25 million over the period 1997 through 1999, of which $22 million has been spent through January 2, 1999. These costs are being expensed as incurred. Cautionary Statement on Forward-Looking Statements From time to time, the Company may make oral or written statements, including statements in this Annual Report, that constitute "forward-looking statements" within the meaning of the federal securities laws. This includes statements concerning plans and objectives of management relating to the Company's operations or economic performance, and assumptions related thereto. 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 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. VF CORPORATION CONSOLIDATED BALANCE SHEETS
JANUARY 2 JANUARY 3 In thousands 1999 1998 ----------- ----------- ASSETS CURRENT ASSETS Cash and equivalents $ 63,208 $ 124,094 Accounts receivable, less allowances of $52,011 in 1998 and $39,576 in 1997 705,734 587,934 Inventories 954,007 774,755 Deferred income taxes 99,608 94,750 Other current assets 25,595 19,933 ----------- ----------- Total current assets 1,848,152 1,601,466 PROPERTY, PLANT AND EQUIPMENT 776,091 705,990 INTANGIBLE ASSETS 951,562 814,332 OTHER ASSETS 260,861 200,994 ----------- ----------- $ 3,836,666 $ 3,322,782 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term borrowings $ 244,910 $ 24,191 Current portion of long-term debt 969 450 Accounts payable 341,126 301,103 Accrued liabilities 446,001 440,164 ----------- ----------- Total current liabilities 1,033,006 765,908 LONG-TERM DEBT 521,657 516,226 OTHER LIABILITIES 181,750 143,813 REDEEMABLE PREFERRED STOCK 54,344 56,341 DEFERRED CONTRIBUTIONS TO EMPLOYEE STOCK OWNERSHIP PLAN (20,399) (26,275) ----------- ----------- 33,945 30,066 COMMON SHAREHOLDERS' EQUITY Common Stock, stated value $1; shares authorized 300,000,000; shares outstanding, 119,466,101 in 1998 and 121,225,298 in 1997 119,466 121,225 Additional paid-in capital 801,511 744,108 Accumulated other comprehensive income (25,639) (36,110) Retained earnings 1,170,970 1,037,546 ----------- ----------- Total common shareholders' equity 2,066,308 1,866,769 ----------- ----------- $ 3,836,666 $ 3,322,782 =========== ===========
See notes to consolidated financial statements. 1 VF CORPORATION CONSOLIDATED STATEMENTS OF INCOME
FISCAL YEAR ENDED --------------------------------------------- JANUARY 2 JANUARY 3 JANUARY 4 In thousands, except per share amounts 1999 1998 1997 ----------- ----------- ----------- NET SALES $ 5,478,807 $ 5,222,246 $ 5,137,178 COSTS AND OPERATING EXPENSES Cost of products sold 3,586,686 3,440,611 3,458,166 Marketing, administrative and general expenses 1,198,854 1,175,598 1,122,076 Other operating expense (income) 9,098 964 (347) ----------- ----------- ----------- 4,794,638 4,617,173 4,579,895 ----------- ----------- ----------- OPERATING INCOME 684,169 605,073 557,283 OTHER INCOME (EXPENSE) Interest income 6,411 23,818 13,406 Interest expense (62,282) (49,695) (62,793) Miscellaneous, net 3,300 6,684 512 ----------- ----------- ----------- (52,571) (19,193) (48,875) ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 631,598 585,880 508,408 INCOME TAXES 243,292 234,938 208,884 ----------- ----------- ----------- NET INCOME $ 388,306 $ 350,942 $ 299,524 =========== =========== =========== EARNINGS PER COMMON SHARE Basic $ 3.17 $ 2.76 $ 2.32 Diluted 3.10 2.70 2.28 CASH DIVIDENDS PER COMMON SHARE $ .81 $ .77 $ .73
See notes to consolidated financial statements. 2 VF CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FISCAL YEAR ENDED -------------------------------------- JANUARY 2 JANUARY 3 JANUARY 4 1999 1998 1997 --------- --------- --------- In thousands NET INCOME $ 388,306 $ 350,942 $ 299,524 OTHER COMPREHENSIVE INCOME Foreign currency translation, net of income taxes 10,471 (42,538) (14,055) --------- --------- --------- COMPREHENSIVE INCOME $ 398,777 $ 308,404 $ 285,469 ========= ========= =========
See notes to consolidated financial statements. 3 VF CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEAR ENDED --------------------------------------- JANUARY 2 JANUARY 3 JANUARY 4 In thousands 1999 1998 1997 --------- --------- --------- OPERATIONS Net income $ 388,306 $ 350,942 $ 299,524 Adjustments to reconcile net income to cash provided by operations: Depreciation 128,495 128,734 132,440 Amortization of intangible assets 32,890 27,518 28,138 Other, net 31,161 (9,396) (18,239) Changes in current assets and liabilities: Accounts receivable (48,771) (9,972) 25,270 Inventories (52,406) (55,677) 110,807 Accounts payable (17,013) (12,587) 43,196 Other, net (29,983) 35,099 90,318 --------- --------- --------- Cash provided by operations 432,679 454,661 711,454 INVESTMENTS Capital expenditures (189,059) (154,262) (138,747) Business acquisitions (299,900) (16,003) (24,284) Other, net (16,943) (13,578) 36,887 --------- --------- --------- Cash invested (505,902) (183,843) (126,144) FINANCING Increase (decrease) in short-term borrowings 212,457 8,745 (213,746) Proceeds from long-term debt 4,132 -- 15,556 Payment of long-term debt (2,998) (1,253) (111,522) Purchase of Common Stock (147,398) (391,651) (61,483) Cash dividends paid (101,660) (100,141) (97,036) Proceeds from issuance of Common Stock 45,689 64,964 67,819 Other, net 2,115 1,983 1,656 --------- --------- --------- Cash provided (used) by financing 12,337 (417,353) (398,756) --------- --------- --------- NET CHANGE IN CASH AND EQUIVALENTS (60,886) (146,535) 186,554 CASH AND EQUIVALENTS - BEGINNING OF YEAR 124,094 270,629 84,075 --------- --------- --------- CASH AND EQUIVALENTS - END OF YEAR $ 63,208 $ 124,094 $ 270,629 ========= ========= =========
See notes to consolidated financial statements. 4 VF CORPORATION CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
ACCUMULATED ADDITIONAL OTHER COMMON PAID-IN COMPREHENSIVE RETAINED In thousands STOCK CAPITAL INCOME EARNINGS ----------- ----------- ------------- ----------- BALANCE DECEMBER 30, 1995 $ 63,439 $ 593,976 $ 20,483 $ 1,093,608 Net income -- -- -- 299,524 Cash dividends: Common Stock -- -- -- (93,020) Series B Preferred Stock -- -- -- (4,016) Tax benefit from Preferred Stock dividends -- -- -- 827 Redemption of Preferred Stock -- -- -- (1,218) Restricted Common Stock -- 23 -- -- Purchase of treasury shares (1,015) -- -- (60,468) Exercise of stock options, net of shares surrendered 1,484 74,555 -- (388) Foreign currency translation, net of $7,568 deferred income taxes -- -- (14,055) -- ----------- ----------- ----------- ----------- BALANCE JANUARY 4, 1997 63,908 668,554 6,428 1,234,849 Net income -- -- -- 350,942 Cash dividends: Common Stock -- -- -- (96,337) Series B Preferred Stock -- -- -- (3,804) Tax benefit from Preferred Stock dividends -- -- -- 700 Redemption of Preferred Stock -- -- -- (1,855) Restricted Common Stock 9 (520) -- 601 Purchase of treasury shares (5,239) -- -- (386,412) Exercise of stock options, net of shares surrendered 1,457 76,074 -- (48) Foreign currency translation, net of $22,905 deferred income taxes -- (42,538) -- Two-for-one stock split 61,090 -- -- (61,090) ----------- ----------- ----------- ----------- BALANCE JANUARY 3, 1998 121,225 744,108 (36,110) 1,037,546
(continued) 5 VF CORPORATION CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY (continued)
ACCUMULATED ADDITIONAL OTHER COMMON PAID-IN COMPREHENSIVE RETAINED In thousands STOCK CAPITAL INCOME EARNINGS ----------- ----------- ------------- ----------- BALANCE JANUARY 3, 1998 $ 121,225 $ 744,108 $ (36,110) $ 1,037,546 Net income -- -- -- 388,306 Cash dividends: Common Stock -- -- -- (97,943) Series B Preferred Stock -- -- -- (3,717) Tax benefit from Preferred Stock dividends -- -- -- 568 Redemption of Preferred Stock -- -- -- (2,763) Restricted Common Stock 19 208 -- (37) Purchase of treasury shares (3,223) -- -- (144,175) Common Stock held in trust for deferred compensation plans (233) -- -- (6,728) Exercise of stock options, net of shares surrendered 1,678 57,195 -- (87) Foreign currency translation, net of $5,638 deferred income taxes -- -- 10,471 -- ----------- ----------- ----------- ----------- BALANCE JANUARY 2, 1999 $ 119,466 $ 801,511 $ (25,639) $ 1,170,970 =========== =========== =========== ===========
See notes to consolidated financial statements. 6 VF CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 2, 1999 NOTE A - ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of VF Corporation and all majority owned subsidiaries after elimination of intercompany transactions and profits. INVENTORIES are stated at the lower of cost or market. Inventories stated on the last-in, first-out method represent 48% of total 1998 inventories and 53% in 1997. Remaining inventories are valued using the first-in, first-out method. PROPERTY AND DEPRECIATION: Property, plant and equipment are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets, ranging up to 40 years for buildings and 10 years for machinery and equipment. INTANGIBLE ASSETS represent the excess of costs over the fair value of net tangible assets of businesses acquired, less accumulated amortization of $243.5 million and $208.3 million in 1998 and 1997. These assets are amortized on the straight-line method over ten to forty years. The Company's policy is to evaluate intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This evaluation is based on a number of factors, including a business unit's expectations for operating income and undiscounted cash flows that will result from the use of such assets. ADVERTISING COSTS are expensed as incurred and were $287.5 million in 1998, $309.3 million in 1997 and $271.4 million in 1996. OTHER COMPREHENSIVE INCOME consists of certain changes in assets and liabilities that are not included in Net Income but are instead reported under generally accepted accounting principles within a separate component of Common Shareholders' Equity. All amounts in Accumulated Other Comprehensive Income relate to foreign currency translation and are net of income taxes at a 35% rate. STOCK SPLIT: During 1997, the Company declared a two-for-one stock split. Common Stock increased and Retained Earnings decreased by $61.1 million, representing the stated value of additional shares issued. Amounts presented in the Consolidated Statements of Common Shareholders' Equity are based on actual share amounts outstanding for each period presented. 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. 7 NOTE B - ACQUISITIONS On January 8, 1998, the Company acquired the stock of Bestform Group, Inc. for $184.3 million in cash, plus repayment of $44.4 million of debt. Bestform is a manufacturer and marketer of intimate apparel in the United States. The Company also acquired three other businesses during 1998 for an aggregate cost of $76.1 million. Intangible assets related to these acquisitions totaled $166.2 million. The following unaudited pro forma results of operations assume that these acquisitions had occurred at the beginning of 1997:
1998 1997 ----------- ----------- In thousands, except per share amounts Net sales $ 5,587,378 $ 5,733,355 Net income 388,743 361,238 Earnings per common share: Basic $ 3.17 $ 2.84 Diluted 3.10 2.78
During the years 1996 and 1997, the Company acquired a total of four businesses, primarily related to jeanswear products, for an aggregate cost of $40.3 million, of which $28.6 million represents intangible assets. All acquisitions have been accounted for as purchases, and accordingly the purchase prices have been allocated to the net assets acquired based on fair values at the dates of acquisition. The excess of cost over fair value of the purchased businesses has been allocated to intangible assets and is being amortized primarily over 40 years. Operating results of these businesses have been included in the consolidated financial statements since the dates of acquisition. NOTE C - INVENTORIES
1998 1997 -------- -------- In thousands Finished products $552,729 $434,000 Work in process 185,929 166,947 Materials and supplies 215,349 173,808 -------- -------- $954,007 $774,755 ======== ========
The current cost of inventories stated on the last-in, first-out method is not significantly different from their value determined under the first-in, first-out method. 8 NOTE D - PROPERTY, PLANT AND EQUIPMENT
1998 1997 ---------- ---------- In thousands Land $ 45,296 $ 44,786 Buildings 443,619 437,903 Machinery and equipment 1,222,216 1,086,263 ---------- ---------- 1,711,131 1,568,952 Less accumulated depreciation 935,040 862,962 ---------- ---------- $ 776,091 $ 705,990 ========== ==========
NOTE E - SHORT-TERM BORROWINGS The weighted average interest rate for short-term borrowings from banks was 5.8% at the end of 1998 and 10.5% at the end of 1997. The Company maintains an unsecured revolving credit agreement with a group of banks for $750.0 million that supports commercial paper borrowings and is otherwise available for general corporate purposes. The agreement, which extends to October 1999, requires a .12% facility fee per year and contains various financial covenants, including minimum net worth and debt ratio requirements. At January 2, 1999, there was $180.0 million outstanding under the agreement. NOTE F - ACCRUED LIABILITIES
1998 1997 -------- -------- In thousands Income taxes $ 70,112 $ 86,244 Compensation 103,769 84,425 Insurance 18,605 62,153 Other 253,515 207,342 -------- -------- $446,001 $440,164 ======== ========
9 NOTE G - LONG-TERM DEBT
1998 1997 -------- -------- In thousands 9.50% notes, due 2001 $100,000 $100,000 6.63% notes, due 2003 100,000 100,000 7.60% notes, due 2004 100,000 100,000 6.75% notes, due 2005 100,000 100,000 9.25% debentures, due 2022 100,000 100,000 Other 22,626 16,676 -------- -------- 522,626 516,676 Less current portion 969 450 -------- -------- $521,657 $516,226 ======== ========
The scheduled payments of long-term debt are $4.2 million in 2000, $115.8 million in 2001, $.2 million in 2002 and $100.2 million in 2003. The Company paid interest of $59.5 million in 1998, $48.0 million in 1997 and $62.6 million in 1996. NOTE H - OTHER LIABILITIES
1998 1997 -------- -------- In thousands Deferred compensation $151,436 $113,727 Deferred income taxes 11,512 -- Other 18,802 30,086 -------- -------- $181,750 $143,813 ======== ========
NOTE I - BENEFIT PLANS The Company sponsors a noncontributory defined benefit pension plan covering substantially all full-time domestic employees. The effect of the defined benefit plan on income is as follows:
1998 1997 1996 -------- -------- -------- In thousands Service cost - benefits earned during the year $ 19,738 $ 16,726 $ 17,160 Interest cost on projected benefit obligation 36,370 33,577 31,060 Expected return on plan assets (45,270) (34,771) (30,947) Amortization of: Transition asset (3,068) (4,378) (4,378) Prior service cost 5,179 4,987 4,987 -------- -------- -------- Pension expense $ 12,949 $ 16,141 $ 17,882 ======== ======== ========
10 The following provides a reconciliation of the changes in fair value of the plan's assets and benefit obligation, based on a September 30 valuation date, plus the funded status at the end of each year:
1998 1997 --------- --------- In thousands Fair value of plan assets, beginning of year $ 526,087 $ 405,000 Actual return on plan assets 28,013 115,805 Company contributions 20,400 27,000 Benefits paid (20,909) (21,718) --------- --------- Fair value of plan assets, end of year 553,591 526,087 --------- --------- Benefit obligation, beginning of year 473,940 411,295 Service cost 19,738 16,726 Interest cost 36,370 33,577 Plan amendments 19,005 2,896 Actuarial loss 22,333 31,164 Benefits paid (20,909) (21,718) --------- --------- Benefit obligation, end of year 550,477 473,940 --------- --------- Funded status, end of year 3,114 52,147 Unrecognized net actuarial (gain) loss 2,107 (37,483) Unrecognized prior service cost 29,943 16,117 Unrecognized net transition asset -- (3,068) --------- --------- Pension asset recorded in Other Assets $ 35,164 $ 27,713 ========= =========
The projected benefit obligation was determined using an assumed discount rate of 6.8% in 1998, 7.5% in 1997 and 8.0% in 1996. The assumption for compensation increases was 4.0% in 1998 and 4.5% in 1997 and 1996, and the assumption for return on plan assets was 8.8% in each year. The Company sponsors an Employee Stock Ownership Plan (ESOP) as part of a 401(k) savings plan covering most domestic salaried employees. Contributions made by the Company to the 401(k) plan are based on a specified percentage of employee contributions. Cash contributions by the Company were $6.5 million in 1998, $5.7 million in 1997 and $5.5 million in 1996. Plan expense was $5.5 million in 1998 and 1997 and $5.7 million in 1996, after giving effect to tax-deductible dividends on the Series B Preferred Stock of $3.7 million in 1998, $3.8 million in 1997 and $4.0 million in 1996. The Company sponsors a nonqualified supplemental retirement pension plan. The actuarially determined projected benefit obligation at the end of 1998 was $41.2 million, of which $20.2 million is accrued in Other Liabilities. The Company also sponsors other savings and retirement plans for certain domestic and foreign employees. Expense for these plans totaled $10.5 million in 1998, $9.1 million in 1997 and $9.6 million in 1996. 11 NOTE J - CAPITAL Common shares outstanding are net of shares held in treasury of 17,134,370 in 1998, 13,910,519 in 1997 and 4,798,646 in 1996. In addition, 232,899 shares of VF Common Stock held in trust for deferred compensation plans, at a cost of $7.0 million, are treated for financial accounting purposes as treasury shares at the end of 1998. There are 25,000,000 authorized shares of Preferred Stock, $1 par value. As of January 2, 1999, 2,000,000 shares are designated as Series A Preferred Stock, of which none have been issued. In addition, 2,105,263 shares are designated as 6.75% Series B Preferred Stock, which were purchased by the ESOP. There were 1,760,119 shares of Series B Preferred Stock outstanding at January 2, 1999, 1,824,820 outstanding at January 3, 1998 and 1,881,515 outstanding at January 4, 1997, after share redemptions. Each outstanding share of Common Stock has one preferred stock purchase right attached. The rights become exercisable ten days after an outside party acquires, or makes an offer for, 15% or more of the Common Stock. Once exercisable, each right will entitle its holder to buy 1/100 share of Series A Preferred Stock for $175. If the Company is involved in a merger or other business combination or an outside party acquires 15% or more of the Common Stock, each right will be modified to entitle its holder (other than the acquirer) to purchase common stock of the acquiring company or, in certain circumstances, VF Common Stock having a market value of twice the exercise price of the right. In some circumstances, rights other than those held by an acquirer may be exchanged for one share of VF Common Stock. The rights, which expire in January 2008, may be redeemed at $.01 per right prior to their becoming exercisable. NOTE K - REDEEMABLE PREFERRED STOCK Each share of Series B Preferred Stock has a redemption value of $30.88 plus cumulative accrued dividends, is convertible into 1.6 shares of Common Stock and is entitled to two votes per share along with the Common Stock. The trustee for the ESOP may convert the preferred shares to Common Stock at any time or may cause the Company to redeem the preferred shares under certain circumstances. The Series B Preferred Stock also has preference in liquidation over all other stock issues. The ESOP's purchase of the preferred shares was funded by a loan of $65.0 million from the Company that bears interest at 9.80% and is payable in increasing installments through 2002. Interest related to this loan was $3.3 million in 1998, $3.9 million in 1997 and $4.4 million in 1996. Principal and interest obligations on the loan are satisfied as the Company makes contributions to the savings plan and dividends are paid on the Preferred Stock. As principal payments are made on the loan, shares of Preferred Stock are allocated to participating employees' accounts within the ESOP. At the end of 1998, 1,099,474 shares of Preferred Stock had been allocated to participating employees' accounts. 12 NOTE L - STOCK OPTIONS The Company has granted nonqualified stock options to officers, directors and key employees under a stock compensation plan at prices not less than fair market value on the date of grant. Options become exercisable one year after the date of grant and expire ten years after the date of grant. Activity in the stock compensation plan is summarized as follows:
SHARES UNDER WEIGHTED AVERAGE OPTIONS EXERCISE PRICE ------------ ---------------- Balance December 30, 1995 9,524,098 $24.49 Options granted 1,965,400 34.49 Options exercised (2,982,576) 22.87 Options canceled (342,450) 24.86 ---------- ------ Balance January 4, 1997 8,164,472 26.21 Options exercised (2,521,346) 25.78 Options canceled (131,510) 29.88 ---------- ------ Balance January 3, 1998 5,511,616 28.21 Options granted 1,940,000 43.30 Options exercised (1,680,000) 27.26 Options canceled (69,310) 25.41 ---------- ------ Balance January 2, 1999 5,702,306 $33.65 ==========
Stock options outstanding at January 2, 1999 are summarized as follows:
RANGE OF WEIGHTED AVERAGE WEIGHTED EXERCISE NUMBER REMAINING AVERAGE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE -------- ----------- ---------------- -------------- $ 6-10 16,600 1.9 years $ 8.09 16-20 65,220 2.6 years 17.75 21-25 765,896 5.5 years 23.41 26-30 1,609,290 5.4 years 27.27 31-35 1,329,100 7.9 years 34.49 40-45 1,916,200 9.1 years 43.30 - --------- ---------- ---------- ------- $ 6-45 5,702,306 7.2 years $ 33.65 ==========
All above options are exercisable, except for those granted in 1998. There are 3,604,194 shares available for future grants of stock options and restricted stock, of which no more than 1,162,676 may be grants of restricted stock. 13 NOTE L - STOCK OPTIONS (CONTINUED) The Company does not recognize compensation expense for stock options granted at fair market value, as permitted by the accounting standards. However, had compensation expense been determined based on the fair value of the options on the grant dates, the Company's net income would have been reduced by $9.7 million ($.08 per share) in 1998, $9.0 million ($.07 per share) in 1997 and $6.9 million ($.06 per share) in 1996. The fair value of options granted during 1998 was $8.78 per share and of options granted during 1996 was $7.97 per share. Fair value is estimated based on the Black-Scholes option-pricing model with the following assumptions for grants in 1998 and 1996: dividend yield of 2.0% in 1998 and 2.5% in 1996; expected volatility of 20%; risk-free interest rates of 5.4% in 1998 and 6.5% in 1996; and expected lives of 4 years in 1998 and 5 years in 1996. The Company has granted to key employees 47,832 shares of restricted stock that vest in the year 2005. Compensation equal to the market value of shares at the date of grant is amortized to expense over the vesting period. NOTE M - INCOME TAXES The provision for income taxes is computed based on the following amounts of income before income taxes:
1998 1997 1996 -------- -------- -------- In thousands Domestic $582,128 $514,028 $433,959 Foreign 49,470 71,852 74,449 -------- -------- -------- $631,598 $585,880 $508,408 ======== ======== ========
The provision for income taxes consists of:
1998 1997 1996 --------- --------- --------- In thousands Current: Federal $ 172,019 $ 201,924 $ 179,217 Foreign 35,082 46,466 43,493 State 17,084 19,553 15,894 --------- --------- --------- 224,185 267,943 238,604 Deferred, primarily federal 19,107 (33,005) (29,720) --------- --------- --------- $ 243,292 $ 234,938 $ 208,884 ========= ========= =========
14 The reasons for the difference between income taxes computed by applying the statutory federal income tax rate and income tax expense in the financial statements are as follows:
1998 1997 1996 --------- --------- --------- In thousands Tax at federal statutory rate $ 221,059 $ 205,058 $ 177,943 State income taxes, net of federal tax benefit 11,105 12,709 10,331 Amortization of intangible assets 7,916 7,084 7,091 Foreign operating losses with no current benefit 4,715 4,033 7,109 Other, net (1,503) 6,054 6,410 --------- --------- --------- $ 243,292 $ 234,938 $ 208,884 ========= ========= =========
Deferred income tax assets and liabilities consist of the following:
1998 1997 --------- --------- In thousands Deferred income tax assets: Employee benefits $ 55,645 $ 50,917 Inventories 16,780 10,450 Other accrued expenses 110,730 95,841 Operating loss carryforwards 38,083 36,323 Foreign currency translation 13,806 19,444 --------- --------- 235,044 212,975 Valuation allowance (34,249) (32,506) --------- --------- $ 200,795 $ 180,469 ========= ========= Deferred income tax liabilities: Depreciation $ 59,288 $ 47,311 Other 39,857 26,657 --------- --------- $ 99,145 $ 73,968 ========= =========
The Company has $95.2 million of foreign operating loss carryforwards expiring at various dates; a valuation allowance has been provided where it is more likely than not that the deferred tax assets relating to certain of those loss carryforwards will not be realized. Income taxes paid were $215.2 million in 1998, $230.1 million in 1997 and $177.4 million in 1996. Interest income includes $10.5 million in 1997 and $2.6 million in 1996 relating to settlements of prior years' tax examinations. 15 NOTE N - BUSINESS SEGMENT INFORMATION The Company designs and manufactures apparel products marketed primarily under Company-owned brand names. Customers are primarily department, discount and specialty stores throughout the world. The Company manages its businesses through separate marketing companies that support specific brands. Manufacturing and product sourcing needs are met by groups that support individual or in some cases several different product types. These operations have been aggregated into two reportable segments based on product type, method of distribution and economic characteristics. The "Apparel" segment includes jeanswear and related products, women's intimate and sportswear apparel, and children's apparel. The "All Other" segment consists of the Company's knitwear, workwear, daypack and backpack operations, which have different product, customer or economic characteristics than those in the Apparel segment. Management evaluates the operating performance of each of its marketing companies based on their income from operations. Accounting policies used for segment reporting are consistent with those stated in Note A, except that interest income and expense and amortization of intangible assets are not allocated to individual segments and inventories are valued on a first-in, first-out basis. Corporate and other expenses include expenses incurred in and directed by the Corporate offices that are not allocated to specific business units. Segment assets are those used directly in the operations of each business unit, such as accounts receivable, inventories and property, plant and equipment. Corporate assets include investments and deferred income taxes. Financial information for the Company's reportable segments is as follows:
1998 1997 1996 ----------- ----------- ----------- In thousands Net sales: Apparel $ 4,313,082 $ 3,963,869 $ 3,931,780 All Other 1,165,725 1,258,377 1,205,398 ----------- ----------- ----------- Consolidated net sales $ 5,478,807 $ 5,222,246 $ 5,137,178 =========== =========== =========== Segment profit: Apparel $ 693,638 $ 574,384 $ 487,381 All Other 119,674 146,143 141,171 ----------- ----------- ----------- Total segment profit 813,312 720,527 628,552 Interest, net (55,871) (25,877) (49,387) Amortization of intangible assets (32,890) (27,518) (28,138) Corporate and other expenses (92,953) (81,252 (42,619) ----------- ----------- ----------- Consolidated income before income taxes $ 631,598 $ 585,880 $ 508,408 =========== =========== ===========
16
1998 1997 1996 ---------- ---------- ---------- In thousands Segment assets: Apparel $1,858,873 $1,506,035 $1,481,116 All Other 624,889 638,628 622,801 ---------- ---------- ---------- Total segment assets 2,483,762 2,144,663 2,103,917 Cash and equivalents 63,208 124,094 270,629 Intangible assets 951,562 814,332 863,930 Corporate assets 338,134 239,693 211,059 ---------- ---------- ---------- Consolidated assets $3,836,666 $3,322,782 $3,449,535 ========== ========== ========== Depreciation expense: Apparel $ 83,382 $ 81,199 $ 84,043 All Other 37,934 41,624 43,653 Corporate 7,179 5,911 4,744 ---------- ---------- ---------- Consolidated depreciation expense $ 128,495 $ 128,734 $ 132,440 ========== ========== ========== Capital expenditures: Apparel $ 129,532 $ 109,458 $ 93,664 All Other 30,842 32,677 31,099 Corporate 28,685 12,127 13,984 ---------- ---------- ---------- Consolidated capital expenditures $ 189,059 $ 154,262 $ 138,747 ========== ========== ==========
Information by geographic area is presented below, with sales based on the location of the customer:
1998 1997 1996 ---------- ---------- ---------- In thousands Net sales: United States $4,552,785 $4,368,474 $4,203,675 Foreign, primarily Europe 926,022 853,772 933,503 ---------- ---------- ---------- Consolidated net sales $5,478,807 $5,222,246 $5,137,178 ========== ========== ========== Long-lived assets, primarily property, plant and equipment: United States $ 672,534 $ 615,404 $ 639,482 Mexico 60,400 41,055 17,214 Other foreign, primarily Europe 83,842 73,253 79,892 ---------- ---------- ---------- Total long-lived assets $ 816,776 $ 729,712 $ 736,588 ========== ========== ==========
17 Worldwide sales by product category are as follows:
1998 1997 1996 ---------- ---------- ---------- In thousands Jeanswear and related products $2,962,790 $2,888,967 $2,885,232 Intimate apparel 965,782 648,937 650,197 Knitwear 506,365 614,798 601,303 Other 1,043,870 1,069,544 1,000,446 ---------- ---------- ---------- Total $5,478,807 $5,222,246 $5,137,178 ========== ========== ==========
Sales to one domestic discount store group comprise 12.3% of consolidated sales in 1998, 11.1% in 1997 and 10.3% in 1996. NOTE O - LEASES The Company leases certain facilities and equipment under noncancelable operating leases. Rental expense was $64.3 million in 1998, $66.2 million in 1997 and $67.0 million in 1996. Future minimum lease payments are $53.7 million, $45.4 million, $37.3 million, $28.1 million and $22.3 million for the years 1999 through 2003 and $35.0 million thereafter. NOTE P - EARNINGS PER SHARE
1998 1997 1996 -------- -------- -------- In thousands, except per share amounts Basic earnings per share: Net income $388,306 $350,942 $299,524 Less Preferred Stock dividends and redemption premium 5,912 5,003 4,363 -------- -------- -------- Net income available for Common Stock $382,394 $345,939 $295,161 ======== ======== ======== Weighted average Common Stock outstanding 120,744 125,504 127,292 ======== ======== ======== Basic earnings per share $ 3.17 $ 2.76 $ 2.32 ======== ======== ========
18
1998 1997 1996 -------- -------- -------- In thousands, except per share amounts Diluted earnings per share: Net income $388,306 $350,942 $299,524 Increased ESOP expense if Preferred Stock were converted to Common Stock 1,136 1,227 1,318 -------- -------- -------- Net income available for Common Stock and dilutive securities $387,170 $349,715 $298,206 ======== ======== ======== Weighted average Common Stock outstanding 120,744 125,504 127,292 Additional Common Stock resulting from dilutive securities: Preferred Stock 2,854 2,955 3,056 Stock options and other 1,397 1,261 730 -------- -------- -------- Weighted average Common Stock and dilutive securities outstanding 124,995 129,720 131,078 ======== ======== ======== Diluted earnings per share $ 3.10 $ 2.70 $ 2.28 ======== ======== ========
NOTE Q - FINANCIAL INSTRUMENTS The carrying amount and fair value of financial instruments included in the balance sheets are as follows:
1998 1997 --------------------- --------------------- Carrying Fair Carrying Fair Amount Value Amount Value -------- -------- -------- -------- Financial liabilities: In thousands Short-term borrowings $244,910 $244,910 $ 24,191 $ 24,191 Long-term debt 522,626 552,476 516,676 543,976 Series B Preferred Stock 54,344 132,008 56,341 137,915
The fair value of the Company's short-term and long-term debt is estimated based on quoted market prices or values of comparable borrowings. The fair value of the Series B Preferred Stock is based on a valuation by an independent financial consulting firm. The Company enters into short-term foreign currency forward exchange contracts to manage exposures related to specific foreign currency transactions or anticipated cash flows. Changes in the fair values of these contracts are recognized currently in operating income. The amounts of the contracts, and related gains and losses, are not material. In addition, the Company has entered into an interest rate swap contract expiring in October 1999 related to $100 million of the long-term debt. Net cash flows of the swap contract are included in Interest Expense. The fair value of these foreign currency and swap 19 financial instruments approximates their carrying value. 20 VF Corporation Quarterly Results of Operations (Unaudited)
In thousands, Earnings Per Common Share Dividends Per except per share amounts Net Sales Gross Profit Net Income Basic Diluted Common Share - ---------------------------------------------------------------------------------------------------------------------- 1998 First quarter $1,326,205 $ 453,225 $ 78,106 $ .63 $ .62 $ .20 Second quarter 1,350,319 455,956 86,781 .70 .69 .20 Third quarter 1,458,780 514,108 119,615 .98 .96 .20 Fourth quarter 1,343,503 468,832 103,804 .86 .84 .21 - ---------------------------------------------------------------------------------------------------------------------- $5,478,807 $1,892,121 $ 388,306 $3.17 $3.10 $ .81 1997 First quarter $1,262,781 $ 417,837 $ 70,186 $ .54 $ .53 $ .19 Second quarter 1,255,549 427,650 78,904 .61 .60 .19 Third quarter 1,416,906 487,311 108,692 .86 .84 .19 Fourth quarter 1,287,010 448,837 93,160 .75 .74 .20 - ---------------------------------------------------------------------------------------------------------------------- $5,222,246 $1,781,635 $ 350,942 $2.76 $2.70 $ .77 1996 First quarter $1,158,123 $ 380,517 $ 55,930 $ .43 $ .43 $ .18 Second quarter 1,220,997 396,319 69,892 .54 .53 .18 Third quarter 1,380,919 446,358 91,048 .71 .69 .18 Fourth quarter 1,377,139 455,818 82,654 .64 .63 .19 - ---------------------------------------------------------------------------------------------------------------------- $5,137,178 $1,679,012 $ 299,524 $2.32 $2.28 $ .73
VF Corporation Financial Summary
- ------------------------------------------------------------------------------------------------------------------- In thousands, except per share amounts 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Net sales $ 5,478,807 $ 5,222,246 $ 5,137,178 Cost of products sold 3,586,686 3,440,611 3,458,166 - ------------------------------------------------------------------------------------------------------------------- Gross margin 1,892,121 1,781,635 1,679,012 Marketing, administrative and other 1,207,952 1,176,562 1,121,729 - ------------------------------------------------------------------------------------------------------------------- Operating income 684,169 605,073 557,283 Interest, net (55,871) (25,877) (49,387) Miscellaneous, net 3,300 6,684 512 - ------------------------------------------------------------------------------------------------------------------- Income before income taxes 631,598 585,880 508,408 Income taxes 243,292 234,938 208,884 - ------------------------------------------------------------------------------------------------------------------- Net income $ 388,306 $ 350,942 $ 299,524 - ------------------------------------------------------------------------------------------------------------------- Per share of Common Stock(1) Earnings - basic $ 3.17 $ 2.76 $ 2.32 Earnings - diluted 3.10 2.70 2.28 Dividends .81 .77 .73 Average number of common shares outstanding 120,744 125,504 127,292 Net income as % of average common shareholders' equity 19.7% 18.2% 16.2% Net income as % of average total assets 10.2% 10.1% 8.6% - ------------------------------------------------------------------------------------------------------------------- FINANCIAL POSITION Accounts receivable, net $ 705,734 $ 587,934 $ 592,942 Inventories 954,007 774,755 730,823 Total current assets 1,848,152 1,601,466 1,706,326 Property, plant and equipment, net 776,091 705,990 721,524 Total assets 3,836,666 3,322,782 3,449,535 Total current liabilities 1,033,006 765,908 766,267 Long-term debt 521,657 516,226 519,058 Common shareholders' equity 2,066,308 1,866,769 1,973,739 - ------------------------------------------------------------------------------------------------------------------- OTHER STATISTICS Working capital $ 815,146 $ 835,558 $ 940,059 Current ratio 1.8 2.1 2.2 Debt to capital ratio(2) 27.1% 22.5% 21.4% Dividends $ 101,660 $ 100,141 $ 97,036 Purchase of Common Stock 147,398 391,651 61,483 Cash provided by operations 432,679 454,661 711,454 Capital expenditures (excluding acquisitions) 189,059 154,262 138,747 Depreciation and amortization 161,385 156,252 160,578 - ------------------------------------------------------------------------------------------------------------------- MARKET DATA Market price range(1) $54 11/16-33 7/16 $48 1/4-32 1/4 $34 15/16-23 13/16 Book value per common share(1) 17.30 15.40 15.44 Price earnings ratio -high-low 17.3 - 10.5 17.5 - 11.7 15.1 - 10.3 Rate of payout(3) 25.6% 27.9% 31.5% - -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------- In thousands, except per share amounts 1995 1994 - ------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Net sales $ 5,062,299 $ 4,971,713 Cost of products sold 3,577,555 3,387,295 - ------------------------------------------------------------------------------------------------- Gross margin 1,484,744 1,584,418 Marketing, administrative and other 1,137,354 1,053,912 - ------------------------------------------------------------------------------------------------- Operating income 347,390 530,506 Interest, net (66,217) (70,984) Miscellaneous, net 2,962 (3,861) - ------------------------------------------------------------------------------------------------- Income before income taxes 284,135 455,661 Income taxes 126,844 181,125 - ------------------------------------------------------------------------------------------------- Net income $ 157,291 $ 274,536 - ------------------------------------------------------------------------------------------------- Per share of Common Stock(1) Earnings - basic $ 1.20 $ 2.10 Earnings - diluted 1.19 2.05 Dividends .69 .65 Average number of common shares outstanding 127,486 129,240 Net income as % of average common shareholders' equity 8.8% 16.8% Net income as % of average total assets 4.4% 7.9% - ------------------------------------------------------------------------------------------------- FINANCIAL POSITION Accounts receivable, net $ 629,506 $ 613,337 Inventories 841,907 801,338 Total current assets 1,667,637 1,551,166 Property, plant and equipment, net 749,880 767,011 Total assets 3,447,071 3,335,608 Total current liabilities 868,320 912,332 Long-term debt 614,217 516,700 Common shareholders' equity 1,771,506 1,734,009 - ------------------------------------------------------------------------------------------------- OTHER STATISTICS Working capital $ 799,317 $ 638,834 Current ratio 1.9 1.7 Debt to capital ratio(2) 32.3% 32.7% Dividends $ 92,038 $ 88,223 Purchase of Common Stock 86,251 27,878 Cash provided by operations 323,656 479,401 Capital expenditures (excluding acquisitions) 155,206 132,908 Depreciation and amortization 167,721 158,511 - ------------------------------------------------------------------------------------------------- MARKET DATA Market price range(1) $28 9/16-23 3/8 $26 7/8-22 1/8 Book value per common share(1) 13.96 13.51 Price earnings ratio -high-low 23.8 - 19.5 12.8 - 10.5 Rate of payout(3) 57.5% 31.0% - -------------------------------------------------------------------------------------------------
(1) Per share computations and market price ranges have been adjusted to reflect a two-for-one stock split in November 1997. (2) Capital is defined as common shareholders' equity plus short-term and long - term debt. (3) Dividends per share divided by earnings per share. VF Corporation Investor Information Common Stock Listed on the New York Stock Exchange and Pacific Exchange - trading symbol VFC. Shareholders of Record As of February 24, 1999, there were 7,043 shareholders of record. Dividend Policy Quarterly dividends on VF Corporation Common Stock, when declared, are paid on or about the 20th day of March, June, September and December. Dividend Reinvestment Plan The Plan is offered to shareholders by First Chicago Trust Company of New York. The Plan provides for automatic dividend reinvestment and voluntary cash contributions for the purchase of additional shares of VF Corporation Common Stock. Questions concerning general Plan information should be directed to the Office of the Vice President - Administration, General Counsel and Secretary of VF Corporation. Dividend Direct Deposit Shareholders may have their dividends deposited into their savings or checking account at any bank that is a member of the Automated Clearing House (ACH) system. A brochure describing this service may be obtained by contacting First Chicago or VF Corporation. Quarterly Common Stock Price Information The high and low sales prices for the periods indicated were as follows:
1998 1997 1996 High Low High Low High Low First quarter $53 1/4 $40 3/4 $35 11/16 $32 1/2 $28 3/8 $23 13/16 Second quarter 54 11/16 49 11/16 43 5/8 32 1/4 31 11/16 26 7/8 Third quarter 52 1/4 36 5/8 48 1/4 42 9/16 31 3/16 26 1/4 Fourth quarter 50 11/16 33 7/16 47 3/16 41 11/16 34 15/16 29 1/2