Exhibit 99 VF Reports Record Second Quarter Sales and Earnings and Declares Dividend Business Editors/Fashion Editors GREENSBORO, N.C.--(BUSINESS WIRE)--July 21, 2005--VF Corporation (NYSE: VFC): -- Second quarter sales rise 13% -- EPS up 10%, including special items -- Gross margins up two full percentage points to 41.4% -- Acquisitions continue strong performance Information regarding VF's second quarter conference call webcast today can be found at the end of this release. VF Corporation (NYSE: VFC), a global leader in branded apparel, today announced record results for its second quarter ended July 2, 2005. All per share amounts are presented on a diluted basis. Second quarter sales rose 13% to $1,435.8 million from $1,269.5 million in the prior year's second quarter. Net income increased 11% to $100.0 million from $90.1 million, with earnings per share rising 10% to $.88 from $.80. Second quarter earnings include a net benefit of $.07 per share from special items, detailed below. Similarly, second quarter EPS in 2004 included a net benefit of $.04 per share related to the exit of our Playwear business. The acquisitions of the Vans(R), Napapijri(R), Kipling(R), Reef(R) and Holoubek businesses added $156 million to sales and $.09 to earnings per share in the 2005 quarter. For the first six months of 2005, sales increased 11% to $2,999.5 million from $2,702.2 million. Net income rose 15% to $222.9 million from $194.0 million, with earnings per share rising 13% to $1.95 from $1.73. The above acquisitions contributed $312 million to sales and $.20 to earnings per share in the first half of 2005. "We are delighted to report another record quarter," commented Mackey J. McDonald, chairman and chief executive officer. "Our strategy to transform VF into a higher growth, more dynamic company is working: we're investing behind our core brands to maintain their leadership positions and at the same time using our operational and brand management skills to effectively integrate and grow our new brands. Most of our core businesses are strong, healthy and operating at very profitable levels, and our acquisitions are clearly delivering on their potential." He continued, "Earnings rose more than we anticipated during the quarter, due to particularly robust sales in our Outdoor and Sportswear coalitions, which in turn are driving higher gross margins. Two noteworthy examples in the quarter were our Vans(R) brand, where we are benefiting from very strong product launches and the success of a new retail merchandising format, and our Nautica(R) brand, where we experienced a double-digit sales gain and a big improvement in profitability. We also are gratified by the sales increase posted by our U.S. jeanswear business during the quarter." The second quarter 2005 special items referred to above consist of the following: Net Income Per (In millions) Share ----------------------- Settlements of income tax matters in foreign jurisdictions $12.5 $.11 Tax impact of repatriation of foreign earnings - American Jobs Creation Act (7.0) (.06) Reduction of accruals related to postemployment benefits in Mexico 9.4 .08 Capacity alignment actions, principally in intimate apparel (7.2) (.06) ----------------------- Total $7.7 $.07 ======================= Second Quarter Business Review Jeanswear Total Jeanswear sales, which include the Wrangler(R), Lee(R), Riders(R), Rustler(R), H.I.S(R), Maverick(R) and Old Axe(R) brands, rose 2% in the quarter, to $597 million versus $586 million in last year's second quarter, with increases in both international and domestic jeans sales. Sales in our Mass Market and Western Specialty businesses were robust, while our Lee(R) brand business declined. The increase in international jeans sales resulted from favorable foreign currency exchange rates. Jeanswear operating income increased 9%, including the aforementioned reductions in benefit accruals that were greater than required by local laws. The effect in any prior period was not significant. Outdoor Our Outdoor businesses had another excellent quarter. Sales doubled in the quarter to $297 million from $146 million, with the acquisitions of the Vans(R), Kipling(R), Reef(R) and Napapijri(R) brands contributing $138 million of the increase. Our Vans(R) and Kipling(R) brands had exceptionally strong results and continue to outpace our expectations. The Reef(R) brand acquisition, which was completed in April 2005, contributed $25 million to sales in the quarter. Organic sales growth in the quarter was 9%, driven by strong growth in The North Face(R) and JanSport(R) brands. Operating income rose 97%, with a slight decline in margins reflecting the impact of recent acquisitions. Intimate Apparel Sales in our Intimate Apparel business, which includes our Vanity Fair(R), Vassarette(R), Lily of France(R), Bestform(R) and Curvation(R) brands, declined 5% in the quarter, to $223 million from $235 million. We have noted previously that 2004 results benefited from a large new product launch with a specialty store customer, which will result in difficult sales and profit comparisons throughout 2005. The 61% decline in operating income and lower margins primarily result from the lower sales and aggressive actions taken to align capacity and reduce costs. We expect comparisons in the second half of the year to improve versus the first half. Imagewear Our Imagewear coalition reported a 4% sales increase in the quarter, to $181 million from $173 million. The increase in sales was a result of the January 2005 acquisition of the assets of a licensee of the Harley-Davidson Motor Company, Inc., which drove a double-digit sales gain in our licensed sports apparel business. Occupational apparel sales were about flat in the quarter. Operating income rose 16% as we continue to lower product costs and leverage a very solid business platform. Sportswear Sales of our Sportswear businesses, which include the Nautica(R) and John Varvatos(R) brands, as well as Kipling(R) brand sales in North America, increased 22% in the quarter, to $127 million from $105 million. Each Nautica business unit - Men's Sportswear, Jeans, Furnishings and Retail - experienced solid gains in the quarter. The John Varvatos(R) men's luxury sportswear business also continued its rapid sales growth in the quarter. Operating income increased sharply to $19 million, or 15.1% of sales, compared to $1 million in last year's second quarter. Both sales and operating income in the 2004 quarter included the negative impact of an acquisition-related adjustment of $7 million. Overall gross margins for VF increased by two full percentage points in the quarter, to 41.4% from 39.4%, with the improvement coming primarily from growth in our higher margin businesses. Operating margins declined to 11.1% from 11.8% in the prior year period, primarily due to the lower margins in our Intimates business in the current quarter. The tax rate for the 2005 period declined to 29.6% from 32.1% due to the net impact of the income tax settlements and repatriation of foreign earnings, as detailed above. Our balance sheet remains in excellent shape, and we ended the quarter with $250 million in cash. Inventories were up 8% over June 2004 levels, with $23 million of the total increase of $82 million due to the 2005 acquisitions. Debt as a percent of total capital was 29.9% at the end of the quarter, or 24.9% net of cash. During the quarter we repaid $100 million of long-term debt and will repay another $300 million that becomes due on October 1, 2005. During the quarter we repurchased one million shares of common stock, bringing the total shares repurchased year-to-date to two million. We expect to repurchase an additional two million shares over the balance of the year. Outlook For the full year, we continue to expect another record year in both sales and earnings. Sales are expected to rise approximately 7%, excluding any additional acquisitions. We anticipate that sales in the second half of the year will be up approximately 4%, which includes the negative impact of a stronger U.S. dollar versus our prior expectations. We expect comparable increases in both the third and fourth quarters. We now expect that earnings will rise about 10% in 2005 to approximately $4.65 per share, reflecting both continued strong performance across most of our businesses during the second half and the special items reported in the most recent quarter. Third quarter EPS should rise approximately 12%, including an $.08 per share impact from the recognition of certain costs related to the disposition of our Playwear business reported in the third quarter of 2004. Dividend Declared The Board of Directors declared a regular quarterly cash dividend of $.27 per share, payable on September 19, 2005 to shareholders of record as of the close of business on September 9, 2005. 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; the financial strength and competitive conditions, including consolidation, 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 make and integrate acquisitions successfully; the Company's ability to achieve expected sales and earnings growth from ongoing businesses and acquisitions; the Company's ability to achieve its planned cost savings; 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 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, outdoor products, intimate apparel, image apparel and sportswear. Its principal 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), Reef(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. Webcast Information VF will hold its second quarter conference call and webcast at 9:00 a.m. ET. Interested parties should call (800)811-0667 domestic, or (913)981-4901 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, 2005 and can be accessed by dialing (888)203-1112 domestic, and (719) 457-0820 international. The pass code is 3281749. A replay also can be accessed at the Company's web site at www.vfc.com. VF CORPORATION Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended Six Months Ended June June -------------------------------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Net Sales $1,435,831 $1,269,537 $2,999,474 $2,702,206 Costs and Operating Expenses Cost of goods sold 841,221 769,708 1,755,645 1,648,101 Marketing, administrative and general expenses 445,813 371,785 909,485 763,796 Royalty income and other (9,873) (11,368) (23,222) (24,608) Gain on disposal of Playwear business - (10,363) - (7,417) ---------- ---------- ---------- ---------- 1,277,161 1,119,762 2,641,908 2,379,872 ---------- ---------- ---------- ---------- Operating Income 158,670 149,775 357,566 322,334 Other Income (Expense) Interest, net (16,449) (16,656) (32,107) (33,437) Miscellaneous, net (137) (489) (18) 1,118 ---------- ---------- ---------- ---------- (16,586) (17,145) (32,125) (32,319) ---------- ---------- ---------- ---------- Income Before Income Taxes 142,084 132,630 325,441 290,015 Income Taxes 42,097 42,542 102,586 96,053 ---------- ---------- ---------- ---------- Net Income $ 99,987 $ 90,088 $ 222,855 $ 193,962 ========== ========== ========== ========== Earnings Per Common Share Basic $ 0.90 $ 0.82 $ 2.00 $ 1.77 Diluted 0.88 0.80 1.95 1.73 Weighted Average Shares Outstanding Basic 110,254 109,655 111,008 109,192 Diluted 113,277 112,642 114,102 112,078 Cash Dividends Per Common Share $ 0.27 $ 0.26 $ 0.54 $ 0.52 Basis of presentation: VF operates and reports using a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. Similarly, the fiscal second quarter ends on the Saturday closest to June 30. For presentation purposes herein, all references to periods ended June 2005, December 2004 and June 2004 relate to the fiscal periods ended as of July 2, 2005, January 1, 2005 and July 3, 2004, respectively. Reclassifications: Certain prior year amounts have been reclassified to conform with the 2005 presentation. VF CORPORATION Consolidated Balance Sheets (In thousands) June December June 2005 2004 2004 ------------- ----------- ---------- ASSETS Current Assets Cash and equivalents $ 249,517 $ 485,507 $ 177,382 Accounts receivable, net 792,747 751,582 763,013 Inventories 1,176,548 973,248 1,094,120 Other current assets 199,363 168,231 148,465 ------------- ----------- ---------- Total current assets 2,418,175 2,378,568 2,182,980 Property, Plant and Equipment 1,544,884 1,539,490 1,578,771 Less accumulated depreciation 985,297 967,236 984,578 ------------- ----------- ---------- 559,587 572,254 594,193 Intangible Assets 754,717 639,520 702,229 Goodwill 1,094,562 1,031,594 970,369 Other Assets 399,511 382,342 368,270 ------------- ----------- ---------- $ 5,226,552 $ 5,004,278 $4,818,041 ============= =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 256,090 $ 42,830 $ 271,112 Current portion of long-term debt 301,585 401,232 101,150 Accounts payable 384,757 369,937 379,699 Accrued liabilities 519,005 558,215 443,344 ------------- ----------- ---------- Total current liabilities 1,461,437 1,372,214 1,195,305 Long-term Debt 559,181 556,639 858,569 Other Liabilities 565,579 536,131 525,281 Commitments and Contingencies Redeemable Preferred Stock 24,626 26,053 27,151 Common Stockholders' Equity Common Stock 111,095 111,388 109,998 Additional paid-in capital 1,162,505 1,087,641 1,030,919 Accumulated other comprehensive income (loss) (133,028) (113,071) (134,759) Retained earnings 1,475,157 1,427,283 1,205,577 ------------- ----------- ---------- Total common stockholders' equity 2,615,729 2,513,241 2,211,735 ------------- ----------- ---------- $ 5,226,552 $ 5,004,278 $4,818,041 ============= =========== ========== VF CORPORATION Consolidated Statements of Cash Flows (In thousands) Six Months Ended June ----------------------- 2005 2004 ---------- ---------- Operations Net income $ 222,855 $ 193,962 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 47,633 47,670 Amortization of intangible assets 7,876 3,405 Other amortization 8,327 7,410 Provision for doubtful accounts 6,475 6,783 Pension funding in excess of expense (34,638) (30,146) Other, net (8,844) 7,144 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (36,288) (63,281) Inventories (190,535) (93,804) Accounts payable 13,673 20,946 Accrued liabilities and other (3,019) 42,893 ---------- ---------- Cash provided by operating activities 33,515 142,982 Investments Capital expenditures (50,722) (34,867) Business acquisitions, net of cash acquired (211,301) (614,560) Software purchases (9,484) (4,616) Sale of VF Playwear business 6,667 4,417 Other, net 12,670 3,860 ---------- ---------- Cash used by investing activities (252,170) (645,766) Financing Increase in short-term borrowings 212,525 169,613 Payments on long-term debt (100,743) (708) Purchase of Common Stock (116,066) - Cash dividends paid (61,309) (58,011) Proceeds from issuance of Common Stock 63,805 60,709 Other, net (191) (456) ---------- ---------- Cash provided (used) by financing activities (1,979) 171,147 Net Cash Used by Discontinued Operations - (3,136) Effect of Foreign Currency Rate Changes on Cash (15,356) (2,630) ---------- ---------- Net Change in Cash and Equivalents (235,990) (337,403) Cash and Equivalents - Beginning of Year 485,507 514,785 ---------- ---------- Cash and Equivalents - End of Period $ 249,517 $ 177,382 ========== ========== VF CORPORATION Supplemental Financial Information Business Segment Information (In thousands) Three Months Ended Six Months Ended June June ----------------------- ----------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Coalition sales Jeanswear $ 596,606 $ 586,047 $1,303,327 $1,294,327 Outdoor Apparel and Equipment 296,688 145,737 578,984 270,316 Intimate Apparel 223,016 234,807 450,292 484,227 Imagewear 180,697 173,433 367,865 346,465 Sportswear 127,254 104,728 279,016 246,380 Other 11,570 24,785 19,990 60,491 ---------- ---------- ---------- ---------- Net sales $1,435,831 $1,269,537 $2,999,474 $2,702,206 ========== ========== ========== ========== Coalition profit Jeanswear $ 93,065 $ 85,003 $ 212,274 $ 207,338 Outdoor Apparel and Equipment 42,438 21,543 74,832 35,445 Intimate Apparel 13,600 35,242 37,128 70,498 Imagewear 24,609 21,233 54,899 43,078 Sportswear 19,270 515 46,171 13,702 Other (92) 8,590 (639) 4,418 ---------- ---------- ---------- ---------- Total coalition profit 192,890 172,126 424,665 374,479 Corporate and other expenses (34,357) (22,840) (67,117) (51,027) Interest, net (16,449) (16,656) (32,107) (33,437) ---------- ---------- ---------- ---------- Income before income taxes $ 142,084 $ 132,630 $ 325,441 $ 290,015 ========== ========== ========== ========== CONTACT: VF Services, Inc. Cindy Knoebel, 336-424-6189 or 212-841-7141