Exhibit 99 VF Announces Record First Quarter Revenues and Earnings, Declares Dividend and Raises Full Year Guidance GREENSBORO, N.C.--(BUSINESS WIRE)--April 25, 2006--VF Corporation (NYSE: VFC): -- 1Q EPS up 14%; revenues rise 5% -- Operating margins expand to 12.2% from 11.8% -- 2006 EPS guidance raised to $4.95 Information regarding VF's first quarter conference call webcast today can be found at the end of this release. VF Corporation (NYSE: VFC), a global leader in branded lifestyle apparel, today announced record results for the first quarter of 2006. All per share amounts are presented on a diluted basis. Income rose 12% to a record $128.2 million from $114.7 million before the cumulative effect of a change in accounting policy for stock compensation expense, with earnings per share rising 14% to $1.14 from $1.00. Reflecting the cumulative effect adjustment recorded in the first quarter of 2005, net income in the 2005 period was $102.9 million, equal to $.89 per share. Total revenues increased 5% in the current quarter, to $1,665.7 million compared with $1,582.2 million in the 2005 quarter. Foreign currency translation negatively impacted revenues by approximately $30 million, or 2%, and earnings per share by $.02 in the 2006 quarter. "We are delighted to start the year off on such a positive note, with earnings well in excess of the initial guidance we gave in February," said Mackey J. McDonald, chairman and chief executive officer. "Our growth strategy clearly has momentum, which should continue to build as the year progresses. Importantly, our performance this year is being driven by strong organic growth. Our results this quarter have given us increased confidence in our ability to deliver even stronger revenues and earnings this year than previously anticipated, while at the same time giving us the opportunity to significantly step up the investments behind our most important growth initiatives." First Quarter Business Review Outdoor Our Outdoor team delivered another outstanding quarter. Total revenues increased 35% in the quarter, driven by particularly strong global growth in The North Face(R), Vans(R) and Napapijri(R) brands and by the addition of the Reef(R) brand, acquired in April 2005, which contributed $42 million to revenues in the quarter. Revenues of The North Face(R) brand grew approximately 40%, while revenues of our Vans(R) and Napapijri(R) brands both achieved mid-teen percentage growth rates. Our packs business also grew modestly in the quarter, driven by higher Eastpak(R) brand sales in Europe. The strong volume gains achieved by The North Face(R) and Vans(R) brands were the primary drivers behind a 59% increase in operating income in the quarter, with total Outdoor operating margins rising two full percentage points to 13.1%. Sportswear Each of our Sportswear businesses, which include our Nautica(R) and John Varvatos(R) brands, as well as Kipling(R) brand sales in North America, achieved higher revenues in the quarter. Our Nautica(R) branded wholesale business, including men's sportswear, increased revenues in the quarter at a low single digit rate, with strong sales of our spring product offerings partially offset by slightly lower revenues in Nautica(R) brand retail stores. As anticipated, operating income and operating margins declined in the quarter, due primarily to investments to support the upcoming launch of Nautica(R) brand women's sportswear and our Nautica(R), Kipling(R) and John Varvatos(R) brands' retail store strategies. In addition, margins reflected increased promotional activity in our Nautica(R) brand retail stores during the quarter. Jeanswear We are very pleased with the overall performance of our Jeanswear coalition, which includes our Wrangler(R), Lee(R), Riders(R), Rustler(R) and Wrangler Hero(R) brands. Domestic jeans revenues rose slightly in the quarter, as we continued to experience solid gains in our domestic Mass Market and Western Specialty businesses. While down from prior year levels, Lee(R) brand domestic revenues were better than anticipated and we expect improved top line comparisons beginning in the second quarter. Total Jeanswear revenues were down slightly from prior levels reflecting currency translation effects that negatively impacted revenues by approximately $15 million. Total Jeanswear operating income rose 5% in the quarter reflecting higher sales of full priced products, with operating margins rising to 17.5% from 16.4%. Intimate Apparel Our Intimate Apparel business posted difficult revenues and profit comparisons as expected, with our Private Brands business continuing to be the primary driver behind the revenue decline. We continue to anticipate more stable performance for the remainder of the year. Our management team is highly focused on returning this business to traditional levels of profitability and renewing growth in our strong brands, including Vanity Fair(R), Lily of France(R), Vassarette(R), Bestform(R) and Curvation(R). Imagewear Our Imagewear coalition delivered another excellent quarter. Revenues rose 4%, with the gain due to a strong increase in sales of Image apparel, which includes uniforms for the industrial, public safety and service markets. Operating margins remained strong, at 15.5% in the quarter, with operating income about flat with prior year levels. Gross margins were 42.1% in both the 2006 and 2005 periods. Operating income rose 9% in the quarter, with operating margins increasing to 12.2% from 11.8%. Income rose 12% before the cumulative effect of the change in accounting policy for stock compensation expense in 2005, reflecting lower net interest expense in the current period. Our balance sheet continues to be in excellent shape. Inventories rose 6% versus the comparable quarter in 2005, 2% of which was due to the acquisition of the Reef(R) brand. Debt as a percent of total capital was 24.7% at the end of the quarter. Outlook Based on our strong performance this quarter, we are raising our full year guidance for both revenues and earnings. We now expect revenues to expand 6 to 7%, driven primarily by the momentum in our Outdoor coalition and stronger than anticipated revenues in our domestic Jeanswear business. We also continue to expect that our Imagewear and Sportswear businesses will achieve revenue gains over 2005 levels. "We are committed to maintaining the positive momentum behind our growth strategy and believe the best means of doing so is to continue to invest behind our brands. Accordingly, we plan to invest an additional $20 million this year in increased advertising behind our Jeanswear brands as well as to support a variety of growth initiatives in our Outdoor business," said Mr. McDonald. Previously, we had anticipated an increase in 2006 earnings per share of approximately 6% over the $4.54 reported in 2005 before the cumulative effect adjustment. We are now expecting a 9% increase to approximately $4.95 per share. We're looking forward to a very strong performance in the second half and expect a 7 to 8% percent increase in revenues and approximately 10% increase in earnings per share. The fourth quarter is expected to be particularly strong. Earnings comparisons for the second quarter of 2006 will reflect the impact of special items that benefited net income by $7.7 million, or $.07 per share, in the prior year's quarter. Considering those special items, we currently expect second quarter earnings per share to be about flat with the $0.85 per share reported in the second quarter of 2005. Revenues should rise by 6 to 7%. We continue to anticipate another solid year of cash flow from operations, which should approximate $600 million in 2006. Dividend Declared The Board of Directors declared a regular quarterly cash dividend of $.29 per share, payable on June 19, 2006 to shareholders of record as of the close of business on June 9, 2006. Cautionary Statement on Forward-looking Statements Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements in this release include VF's reliance on a small number of large customers; the financial strength of VF's customers; changing fashion trends and consumer demand; increasing pressure on margins; VF's ability to implement its growth strategy; VF's ability to maintain its distribution and information technology systems; stability of VF's manufacturing facilities and foreign suppliers; continued use by VF's suppliers of ethical business practices; VF's ability to accurately forecast demand for products; continuity of members of VF's management; VF's ability to protect trademarks and other intellectual property rights; maintenance by VF's licensees of the value of VF's brands; the overall level of consumer spending; general economic conditions and other factors affecting consumer confidence; fluctuations in the price, availability and quality of raw materials; foreign currency fluctuations; and legal, regulatory, political and economic risks in international markets. More information on potential factors that could affect VF's financial results is included from time to time in VF's public reports filed with the Securities and Exchange Commission, including VF's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. About the Company VF Corporation is a leader in branded lifestyle apparel including jeanswear, outdoor products, intimate apparel, image apparel and sportswear. Its principal brands include Wrangler(R), Lee(R), Riders(R), Rustler(R), The North Face(R), Vans(R), Reef(R), Napapijri(R), Kipling(R), Nautica(R), John Varvatos(R), JanSport(R), Eastpak(R), Vanity Fair(R), Vassarette(R), Bestform(R), Lily of France(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 first quarter conference call and webcast today at 2:30 p.m. ET. Interested parties should call 1-888-802-2266 domestic, or 1-913-312-1270 international, to access the call. You may also access this call via the Internet at www.vfc.com. A replay will be available through May 8, 2006 and can be accessed by dialing 1-888-203-1112 domestic, and 1-719-457-0820 international. The pass code is 8436724. 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 March ----------------------- (Revised, see Note B) 2006 2005 ---------- ----------- Net Sales $1,646,405 $1,563,643 Royalty Income 19,328 18,542 ---------- ---------- Total Revenues 1,665,733 1,582,185 ---------- ---------- Costs and Operating Expenses Cost of goods sold 964,558 915,564 Marketing, administrative and general expenses 498,228 480,115 ---------- ---------- 1,462,786 1,395,679 ---------- ---------- Operating Income 202,947 186,506 Other Income (Expense) Interest income 1,418 3,016 Interest expense (12,690) (18,674) Miscellaneous, net 882 119 ---------- ---------- (10,390) (15,539) ---------- ---------- Income before Income Taxes and Cumulative Effect of a Change in Accounting Policy 192,557 170,967 Income Taxes 64,372 56,281 ---------- ---------- Income before Cumulative Effect of a Change in Accounting Policy 128,185 114,686 Cumulative Effect of a Change in Accounting Policy - (11,833) ---------- ---------- Net Income $ 128,185 $ 102,853 ========== ========== Earnings Per Common Share - Basic Income before cumulative effect of a change in accounting policy $ 1.16 $ 1.02 Cumulative effect of a change in accounting policy - (0.11) Net income 1.16 0.92 Earnings Per Common Share - Diluted Income before cumulative effect of a change in accounting policy $ 1.14 $ 1.00 Cumulative effect of a change in accounting policy - (0.10) Net income 1.14 0.89 Weighted Average Shares Outstanding Basic 109,854 111,761 Diluted 112,339 114,993 Cash Dividends Per Common Share $ 0.29 $ 0.27 NOTE A: 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 first quarter ends on the Saturday closest to March 31. For presentation purposes herein, all references to periods ended March 2006, December 2005 and March 2005 relate to the fiscal periods ended as of April 1, 2006, December 31, 2005 and April 2, 2005, respectively. NOTE B: During the fourth quarter of 2005, VF elected to early adopt FASB Statement No. 123 (Revised), Share-Based Payment, effective as of the beginning of 2005 using the modified retrospective method. Under this method of adoption, VF restated its 2005 interim financial statements as follows: (1) recorded in the first quarter a noncash charge as the Cumulative Effect of a Change in Accounting Policy for periods prior to January 2005, (2) restated its operating results, including segment information, for each quarter of 2005 to recognize compensation cost for grants of stock options and other stock-based compensation, (3) reclassified accrued stock-based compensation from Current Liabilities to Common Stockholders' Equity in the Consolidated Balance Sheet and (4) reclassified the tax benefits from the exercise of stock options from operating activities to financing activities in the Consolidated Statement of Cash Flows. NOTE C: Beginning in the fourth quarter of 2005, Royalty Income was classified as a separate component of Total Revenues, with related expenses classified in Marketing, Administrative and General. Prior period amounts have been reclassified to conform with the new presentation. VF CORPORATION Consolidated Balance Sheets (In thousands) (Revised, see Note B) March December March 2006 2005 2005 ----------- ----------- ----------- ASSETS Current Assets Cash and equivalents $154,014 $296,557 $365,864 Accounts receivable, net 937,666 764,184 844,009 Inventories 1,048,298 1,081,080 987,737 Other current assets 212,425 223,555 156,347 ----------- ----------- ----------- Total current assets 2,352,403 2,365,376 2,353,957 Property, Plant and Equipment 1,601,435 1,551,411 1,544,786 Less accumulated depreciation 987,734 987,356 972,382 ----------- ----------- ----------- 613,701 564,055 572,404 Intangible Assets 740,932 744,313 653,574 Goodwill 1,097,797 1,097,037 1,028,235 Other Assets 414,264 400,290 411,499 ----------- ----------- ----------- $5,219,097 $5,171,071 $5,019,669 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $213,049 $138,956 $37,852 Current portion of long-term debt 34,938 33,956 401,563 Accounts payable 346,821 451,900 319,010 Accrued liabilities 490,249 527,331 486,755 ----------- ----------- ----------- Total current liabilities 1,085,057 1,152,143 1,245,180 Long-term Debt 689,319 647,728 558,863 Other Liabilities 571,378 539,661 547,578 Commitments and Contingencies Redeemable Preferred Stock 22,497 23,326 24,935 Common Stockholders' Equity Common Stock 109,277 110,108 111,830 Additional paid-in capital 1,302,085 1,277,486 1,199,976 Accumulated other comprehensive income (loss) (186,975) (164,802) (110,062) Retained earnings 1,626,459 1,585,421 1,441,369 ----------- ----------- ----------- Total common stockholders' equity 2,850,846 2,808,213 2,643,113 ----------- ----------- ----------- $5,219,097 $5,171,071 $5,019,669 =========== =========== =========== VF CORPORATION Consolidated Statements of Cash Flows (In thousands) Three Months Ended March ------------------- (Revised, see Note B) 2006 2005 --------- --------- Operating Activities Net income $ 128,185 $ 102,853 Adjustments to reconcile net income to cash used by operating activities: Cumulative effect of a change in accounting policy - 11,833 Depreciation 23,455 22,199 Amortization of intangible assets 4,018 3,696 Other amortization 4,237 4,100 Stock-based compensation 18,725 17,229 Provision for doubtful accounts 980 4,524 Pension funding in excess of expense (64,055) (44,739) Other, net 796 (917) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (174,738) (100,070) Inventories 32,955 (10,106) Accounts payable (105,042) (52,157) Accrued liabilities and other 23,457 11,802 --------- --------- Cash used by operating activities (107,027) (29,753) Investing Activities Capital expenditures (18,939) (29,229) Business acquisitions, net of cash acquired (1,225) (23,817) Software purchases (5,405) (5,964) Other, net 340 4,410 --------- --------- Cash used by investing activities (25,229) (54,600) Financing Activities Increase in short-term borrowings 73,461 (4,751) Payments on long-term debt (488) (531) Purchase of Common Stock (55,365) (59,073) Cash dividends paid (32,252) (30,801) Proceeds from issuance of Common Stock 3,839 54,373 Tax benefits of stock option exercises 751 9,610 --------- --------- Cash used by financing activities (10,054) (31,173) Effect of Foreign Currency Rate Changes on Cash (233) (4,117) --------- --------- Net Change in Cash and Equivalents (142,543) (119,643) Cash and Equivalents - Beginning of Year 296,557 485,507 --------- --------- Cash and Equivalents - End of Period $ 154,014 $ 365,864 ========= ========= VF CORPORATION Supplemental Financial Information Business Segment Information (In thousands) Three Months Ended March ----------------------- (Revised, see Note B) 2006 2005 ---------- ----------- Coalition revenues Jeanswear $ 703,820 $ 713,502 Outdoor 385,645 285,381 Intimate Apparel 210,111 227,703 Imagewear 193,965 187,304 Sportswear 163,021 159,596 Other 9,171 8,699 ---------- ---------- Total coalition revenues $1,665,733 $1,582,185 ========== ========== Coalition profit Jeanswear $ 123,023 $ 116,679 Outdoor 50,592 31,725 Intimate Apparel 15,759 22,308 Imagewear 30,051 29,570 Sportswear 20,453 26,429 Other (1,210) (724) ---------- ---------- Total coalition profit 238,668 225,987 Corporate and other expenses (34,839) (39,362) Interest, net (11,272) (15,658) ---------- ---------- Income before income taxes $ 192,557 $ 170,967 ========== ========== CONTACT: VF Services, Inc. Cindy Knoebel, CFA, 212-841-7141 or 336-424-6189 VP, Financial & Corporate Communications