Exhibit 99.1 VF Announces Record Second Quarter Sales and Earnings Per Share, and Declares Dividend GREENSBORO, N.C.--(BUSINESS WIRE)--July 21, 2004--VF Corporation (NYSE:VFC): -- Second quarter sales rise 12%; EPS up 18% -- Gross margins rise sharply to 39.4% from 37.1% -- New investments in growth planned -- Raising guidance to reflect recent acquisitions -- Continue to expect record sales and EPS in 2004 VF will hold its second quarter conference call and webcast at 8:30 a.m. EDT. Interested parties should call 800-366-3908, domestic, or 303-262-2075, international, to access the call. You may also access this call via the Internet at www.vfc.com. A replay will be available through August 4 and can be accessed by dialing 800-405-2236, domestic, and 303-590-3000, international. The pass code is 11002948. A replay can also be accessed at the Company's web site at www.vfc.com. VF Corporation (NYSE:VFC), a leader in branded apparel, today announced record results for its second quarter. Commented Mackey J. McDonald, chairman and chief executive officer, "This was a terrific quarter on all accounts, with growth coming from both our core businesses as well as newly acquired brands. We now have more diversification in our business mix, more brands with strong growth potential and more opportunities to invest in our future." Second quarter sales rose 12% to $1,269.5 million from $1,134.7 million in the prior year's second quarter, with growth in most of the Company's core businesses. Net income increased 20% to $90.1 million from $74.9 million, with earnings per share rising 18% to $.80 from $.68. As anticipated, earnings include a benefit of $10.4 million ($.06 per share) related to disposition of the Company's Playwear business. The acquisition of Nautica contributed $115 million to sales and as expected was dilutive to earnings per share by $.04. The acquisitions of the Vans(R), Napapijri(R) and Kipling(R) brands added $11 million to sales in the quarter and $.01 to earnings per share. For the first six months of 2004, sales increased 13% to $2,702.2 million from $2,384.8 million. Net income rose 16% to $194.0 million from $167.0 million, with earnings per share rising 15% to $1.73 from $1.51. Business Review Sales in the Company's Outdoor businesses, which include The North Face(R), Vans(R), JanSport(R), Eastpak(R), Napapijri(R) and Kipling(R) brands, jumped 21% in the quarter to $146 million from $121 million. The North Face(R) brand continued its strong growth in the quarter, with sales up 52%. Two new stores, in Amsterdam and Hong Kong, were added during the quarter. Additional stores in Boston, Milan and Helsinki are on plan to open in the third quarter. Fall bookings for the brand remain robust, up 47% in the U.S. and 28% internationally. Sales in the Company's Packs business declined slightly in the quarter but are expected to increase for the year, with growth driven by travel and apparel products. Total Jeanswear sales declined 6% to $579 million in the second quarter, reflecting challenges faced by several key customers in the U.S. International jeans sales rose 6% from the prior year level due to favorable currency translations. The Company noted that its Jeanswear sales rose 2% in the first quarter and are expected to increase in both the third and fourth quarters. The anticipated increase in total Jeanswear sales in the second half of the year is based on the strong response to new programs including the Wrangler Jeans Co.(TM), Riders(R) Copper Collection(TM), "Buddy Lee Registered(TM)", "One True Fit(TM)" and "Ultimate 5" lines in the U.S. and a new line under the Lee(R) trademark in Europe. Global intimate apparel sales saw a strong increase in the quarter, up 12% to $235 million from $210 million in the prior year's second quarter. The Company's department store, mass channel, private label and international businesses all reported higher sales in the period. Sales in our Imagewear coalition showed a strong turnaround, rising 11% in the quarter to $173 million from $156 million last year. Our licensed sports apparel business continued its strong growth, with sales up 19% in the period. Occupational apparel rose 10% to $114 million from $104 million in 2003, marking an improvement in the sales trend for the first time in several years. Sportswear sales were $112 million in the quarter. Our Nautica men's sportswear business continues to perform slightly better than anticipated, with a healthy gain in retail sales per square foot despite a significant reduction in retail floor space for the brand. Our fall bookings remain on plan. Profitability was strong in the quarter, with improvements in operating margins across most of our core businesses. Gross margins in the quarter improved by more than 200 basis points, rising to 39.4% from 37.1%. Royalty and other income increased 88%, primarily due to the contribution of licensing income from Nautica. Operating margins increased to 11.8% in the quarter from 11.1% in the prior year's period. VF's balance sheet, liquidity and cash flow remain very strong. Inventories rose only 6%, despite the addition of $153 million of inventories from Nautica and the acquisitions of Vans, Napapijri and Kipling. Inventories in the Company's core businesses declined 9% in the quarter. The Company generated strong cash flow from continuing operations of $133 million in the first half of 2004. Based on the strength of its businesses, the Company now anticipates that cash flow from continuing operations will increase to a range of $500 to $550 million in 2004. Debt as a percent of total capital was 35.7% at the end of the quarter. Outlook We continue to expect another strong year in sales and earnings in 2004. Sales are expected to increase by 12 to 15%, and could hit $6 billion for the year - a significant new milestone for us. Earnings per share are expected to increase approximately 8%. The acquisitions of the Vans(R), Napapijri(R) and Kipling(R) brands are expected to contribute approximately $275 million to sales and $.05 to earnings per share. We are committed to investing in our Company's future growth and are planning to make investments in a number of targeted areas during the remainder of 2004 to support this growth. Our core businesses are performing very well in both sales and earnings, and we continue to believe they have great promise. To sustain our performance, unlock the potential of our core brands and capitalize on our newly acquired brands, we plan to invest an additional $45 million in our brands, our people and our organization this year. These expenditures totaled nearly $8 million in the second quarter and are expected to approximate $15 million and $22 million in the third and fourth quarters, respectively. In terms of the third quarter, we currently expect a sales increase of 20 to 25% and an increase in earnings per share of approximately 10%. Included in this guidance is the negative impact from the Company's Playwear business of $.06 per share, primarily driven by the recognition of certain costs related to the disposition of the business. Fourth quarter sales should rise 5 to 8% and earnings per share should be about flat with prior year results. The Company noted that results in the fourth quarter of 2003 included a favorable tax settlement, which benefited earnings by $.07 per share. "We have tremendous momentum, which is giving us the opportunity to make investments that will fuel our future growth while still enabling us to deliver strong bottom line results to our shareholders," said Mr. McDonald. He indicated that the Company is boosting its marketing spending, investing in new resources in such areas as strategic planning and leadership development, and establishing a new customer team organization. VF is also exploring new ways to maximize the efficiency of its supply chain to more fully leverage its global capabilities across all business units and improve profitability. "This is an exciting time for our company - not only are we exceeding our growth targets, we are putting in place the foundation for consistent, sustainable growth in coming years," he said. Dividend Declared The Board of Directors declared a regular quarterly cash dividend of $.26 per share, payable on September 20, 2004 to shareholders of record as of the close of business on September 10, 2004. Cautionary Statement on Forward-looking Statements Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Management cautions that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Important risk factors that could cause the actual results of operations or financial condition of the Company to differ include, but are not limited to, the overall level of consumer spending for apparel; changes in trends in the segments of the market in which the Company competes; competitive conditions in and financial strength of our customers and of our suppliers; actions of competitors, customers, suppliers and service providers that may impact the Company's business; the Company's ability to integrate acquisitions successfully; the Company's ability to achieve expected sales and earnings growth from acquisitions; terrorist actions; and the impact of economic and political factors in the markets where the Company competes, such as recession or changes in interest rates, currency exchange rates, price levels, capital market valuations and other external economic and political factors over which the Company has no control. Investors are also directed to consider the risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. About the Company VF Corporation is a leader in branded apparel including jeanswear, intimate apparel, sportswear, outdoor products and workwear. Its principle brands include Lee(R), Wrangler(R), Riders(R), Rustler(R), Vanity Fair(R), Vassarette(R), Bestform(R), Lily of France(R), Nautica(R), Earl Jean(R), John Varvatos(R), JanSport(R), Eastpak(R), The North Face(R), Vans(R), Napapijri(R), Kipling(R), Lee Sport(R) and Red Kap(R). VF Corporation's press releases, annual report and other information can be accessed through the Company's home page, www.vfc.com. VF CORPORATION Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended Six Months Ended ----------------------- ----------------------- July 3 July 5 July 3 July 5 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net Sales $1,269,537 $1,134,742 $2,702,206 $2,384,797 Costs and Operating Expenses Cost of goods sold 769,708 714,011 1,648,101 1,495,303 Marketing, administrative and general expenses 371,785 301,157 763,796 623,491 Royalty income and other (11,368) (6,039) (24,608) (12,369) Gain on disposition of Playwear business (10,363) - (7,417) - ----------- ----------- ----------- ----------- 1,119,762 1,009,129 2,379,872 2,106,425 ----------- ----------- ----------- ----------- Operating Income 149,775 125,613 322,334 278,372 Other Income (Expense) Interest, net (16,656) (13,090) (33,437) (25,158) Miscellaneous, net (489) 2,207 1,118 2,938 ----------- ----------- ----------- ----------- (17,145) (10,883) (32,319) (22,220) ----------- ----------- ----------- ----------- Income Before Income Taxes 132,630 114,730 290,015 256,152 Income Taxes 42,542 39,785 96,053 89,141 ----------- ----------- ----------- ----------- Net Income $90,088 $74,945 $193,962 $167,011 =========== =========== =========== =========== Earnings Per Common Share Basic $0.82 $0.69 $1.77 $1.54 Diluted 0.80 0.68 1.73 1.51 Weighted Average Shares Outstanding Basic 109,655 107,412 109,192 107,884 Diluted 112,642 110,088 112,078 110,500 Cash Dividends Per Common Share $0.26 $0.25 $0.52 $0.50 VF CORPORATION Consolidated Balance Sheets (In thousands) July 3 January 3 July 5 2004 2004 2003 --------------- ----------- ----------- ASSETS Current Assets Cash and equivalents $177,382 $514,785 $204,977 Accounts receivable, net 763,791 633,863 695,499 Inventories 1,093,452 932,985 1,030,931 Other current assets 150,380 126,898 146,648 --------------- ----------- ----------- Total current assets 2,185,005 2,208,531 2,078,055 Property, Plant and Equipment 1,583,930 1,559,846 1,561,367 Less accumulated depreciation 984,578 968,166 1,003,460 --------------- ----------- ----------- 599,352 591,680 557,907 Intangible Assets 708,229 318,634 2,037 Goodwill 958,436 700,972 481,174 Other Assets 421,967 425,735 397,936 --------------- ----------- ----------- $4,872,989 $4,245,552 $3,517,109 =============== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $270,048 $33,948 $60,540 Current portion of long-term debt 101,150 1,144 639 Accounts payable 383,959 315,219 262,930 Accrued liabilities 529,786 521,546 442,525 --------------- ----------- ----------- Total current liabilities 1,284,943 871,857 766,634 Long-term Debt 858,569 956,383 602,155 Other Liabilities 490,591 436,018 366,744 Redeemable Preferred Stock 27,151 29,987 32,909 Common Stockholders' Equity Common Stock 109,998 108,170 107,162 Additional paid-in capital 1,030,919 964,990 933,395 Accumulated other comprehensive income (loss) (134,759) (189,455) (181,537) Retained earnings 1,205,577 1,067,602 889,647 --------------- ----------- ----------- Total common stockholders' equity 2,211,735 1,951,307 1,748,667 --------------- ----------- ----------- $4,872,989 $4,245,552 $3,517,109 =============== =========== =========== VF CORPORATION Consolidated Statements of Cash Flows (In thousands) Six Months Ended ---------------------------- July 3 July 5 2004 2003 -------------- ----------- Operations Net income $193,962 $167,011 Adjustments to reconcile net income to cash provided by operating activities of continuing operations: Depreciation 47,670 51,698 Amortization 10,815 4,231 Provision for doubtful accounts 6,783 7,996 Pension funding in excess of expense (30,146) (48,335) Other, net 7,144 7,241 Changes in current assets and liabilities: Accounts receivable (63,281) (98,778) Inventories (93,804) (182,189) Other current assets 5,065 3,748 Accounts payable 20,946 (41,745) Accrued liabilities 27,793 (2,601) -------------- ----------- Cash provided (used) by operating activities of continuing operations 132,947 (131,723) Investments Capital expenditures (34,867) (45,400) Business acquisitions, net of cash acquired (604,525) (3,100) Software purchases (4,616) (6,282) Sale of Playwear business 4,417 - Other, net 3,860 (1,428) -------------- ----------- Cash used by investing activities of continuing operations (635,731) (56,210) Financing Decrease in short-term borrowings 169,613 (2,957) Payments on long-term debt (708) (222) Purchase of Common Stock - (61,400) Cash dividends paid (58,011) (55,165) Proceeds from issuance of Common Stock 60,709 3,840 Other, net (456) (338) -------------- ----------- Cash provided (used) by financing activities of continuing operations 171,147 (116,242) Net Cash Used by Discontinued Operations (3,136) (1,879) Effect of Foreign Currency Rate Changes on Cash (2,630) 14,664 -------------- ----------- Net Change in Cash and Equivalents (337,403) (291,390) Cash and Equivalents - Beginning of Year 514,785 496,367 -------------- ----------- Cash and Equivalents - End of Period $177,382 $204,977 ============== =========== VF CORPORATION Supplemental Financial Information Sales by Product Category (In thousands) Three Months Ended Six Months Ended ----------------------- ----------------------- July 3 July 5 July 3 July 5 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Jeans and related apparel $579,060 $614,301 $1,282,844 $1,303,234 Intimate apparel 234,807 210,446 484,227 442,235 Sportswear 111,712 - 257,860 - Outdoor products 145,736 120,681 270,315 221,066 Occupational apparel 114,392 103,716 225,902 226,571 Other apparel 83,830 85,598 181,058 191,691 ----------- ----------- ----------- ----------- Total $1,269,537 $1,134,742 $2,702,206 $2,384,797 =========== =========== =========== =========== CONTACT: VF Services, Inc. Cindy Knoebel, 336-424-6189/212-841-7141 www.vfc.com 5