Exhibit 99 VF Announces Record Second Quarter Revenues and Earnings, Raises Full Year Guidance and Declares Dividend GREENSBORO, N.C.--(BUSINESS WIRE)--July 19, 2006--VF Corporation (NYSE: VFC): -- Revenues rise 8% on strong organic growth -- Reported EPS up 4%, but up 13% excluding special items in prior year 2Q -- 2006 EPS guidance raised to $5.00 -- Declares quarterly dividend of $.55 per share 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 lifestyle apparel, today announced record results for the second quarter of 2006. All per share amounts are presented on a diluted basis. Revenues rose 8% in the quarter to a record $1,566.8 million compared with $1,452.1 million in the second quarter of 2005, fueled by healthy organic growth across our Outdoor, Jeanswear, Imagewear and Sportswear coalitions. Net income in the current quarter increased to a record $99.0 million compared with $96.7 million in the prior year's quarter, which benefited from $7.7 million, equal to $.07 per share, in special items as detailed on the last page. Accordingly, reported earnings per share increased 4% to $.88. Excluding the effect of the special items in 2005, second quarter earnings per share increased 13%. For the first six months of 2006, revenues were up 7% to $3,232.6 million from $3,034.3 million in the 2005 period. Income rose 7% to $227.2 million from $211.4 million, while earnings per share increased 9% to $2.02 per share from $1.85 per share, before a $.10 per share cumulative effect of a change in accounting policy for stock compensation expense in the first quarter of 2005. Excluding the special items in last year's second quarter and the effect of the accounting change for the first half of 2005, income in the first half of 2006 increased 12% and earnings per share rose 13%. "This quarter is further evidence of the power of our brands, which are benefiting from continued investments in marketing, new talent and infrastructure designed to keep them strong and growing," said Mackey J. McDonald, chairman and chief executive officer. "We are gratified by the strong organic growth our brands are currently generating, which we expect will continue. We are also continuing to aggressively pursue acquisitions, which remain an important component of our future growth." Second Quarter Business Review Outdoor Our Outdoor coalition enjoyed another quarter of robust double-digit growth, with total revenues up 24% to $371.0 million, with strong gains both domestically and internationally. The North Face(R) brand continued its momentum in the quarter with a revenue increase of 16%, while our Vans(R), JanSport(R), Reef(R) and Kipling(R) brands each grew revenues in excess of 20% in the quarter. Operating income rose slightly in the quarter, while operating margins declined to 11.4% from 13.9%. We are continuing to make significant investments in our Outdoor brands to support strong future growth. These investments impacted margins particularly heavily in the second quarter, given the seasonal nature of our Outdoor businesses. Jeanswear Our Jeanswear coalition posted excellent results in the quarter, with growth across most of our brands and geographic markets. Total revenues were up 6% in both our domestic and international jeans businesses. We are encouraged by the results of our efforts to revitalize the Lee(R) brand in the U.S., where revenues grew 11% in the quarter. Reflecting continued strength in our Wrangler Hero(R) and Riders(R) brands, our Mass Market business also experienced solid gains, with revenues up 8%. Growth in international markets such as Latin America, Mexico and China continued, with double-digit revenue increases in each. Revenues in Europe and Canada also grew in the quarter. Jeanswear operating margins were a healthy 13.9% in the quarter compared with 15.3% in the prior year's quarter. Jeanswear operating margin comparisons reflect the impact of the special items that boosted margins by 2.2% in the 2005 quarter. Excluding the special items, Jeanswear operating margins improved by nearly one percentage point in the 2006 quarter. Sportswear Total revenues of our Sportswear coalition, which includes our Nautica(R) and John Varvatos(R) brands as well as the Kipling(R) brand in North America, increased 5% in the quarter. Each brand achieved higher revenues in the quarter. Our Nautica(R) brand men's sportswear business continues to perform very well despite recent department store consolidation, and we are looking forward to the initial test of our new women's sportswear line this fall. Operating income and margins continue to reflect investments to support our women's sportswear initiative. Sportswear operating margins were 12.7% in the current quarter compared to 13.8% in the prior year's quarter, with these investments accounting for nearly all of the decline. Imagewear Our Imagewear team delivered another outstanding quarter, with revenues up 4%. The gain was due to higher sales of Image apparel, which includes uniforms for the industrial, public safety and service markets, while our Licensed Apparel business was about flat with prior year levels. Operating margins jumped two full percentage points in the quarter, to 15.4% from 13.4%. Intimate Apparel Our Intimate Apparel coalition experienced a revenue decline of 3% in the quarter. The revenue decline in our Department Store and Mass Market businesses was partially offset by a strong increase in our Private Brands business and higher international revenues. Operating income and margins improved in the quarter, but the comparisons reflect special items that negatively impacted margins in the prior year's quarter. Operating margins declined to 6.9% in 2006 from 10.3%, excluding the special items in 2005. We are confident that our actions to improve the performance in our Intimates business, which includes such strong brands as Vanity Fair(R), Lily of France(R), Vassarette(R), Bestform(R) and Curvation(R), will be reflected during the second half of 2006. Revenues are expected to be about flat over the second half of 2005, with a slight improvement in operating margins. We continue to grow our base of owned retail stores. Over the past twelve months, we have added a total of 47 stores, including full price and outlet stores, and we expect to add between 45 and 50 additional stores by year-end. The biggest expansion is in our base of Vans(R) stores, with several stores also being added in our Kipling(R), Napapijri(R) and The North Face(R) brands, as well as in our Lee(R) and Wrangler(R) brands internationally. The tax rate rose to 33.3% in the quarter from 29.5% in the prior year's second quarter, due primarily to the impact of the aforementioned special items in the 2005 period. Our balance sheet remains strong. Inventories increased at a lower rate than revenues, rising 4% versus the comparable quarter in 2005. Debt as a percent of total capital was 24.7% at the end of the quarter versus 29.7% at the end of the 2005 period. Outlook Our strong performance to date gives us increased confidence in our outlook for the remainder of 2006. Accordingly, we are raising our full year earnings guidance to $5.00 per share from $4.95 previously, which represents a 10% increase over the $4.54 reported in 2005 before the cumulative effect adjustment. Revenues are now expected to rise approximately 7% for the year, to nearly $7 billion. Strong organic growth should continue in the third quarter, with revenues expected to rise approximately 8%. Earnings per share are anticipated to increase by about 6%, reflecting heavier spending in such areas as marketing, new product launches, technology and distribution to support growth. The fourth quarter should be particularly strong, with earnings per share rising about 17%. "Our growth plan is working," said Mr. McDonald. "We're headed for another record year, with strong momentum across most of our brands and businesses. We're excited about the wide range of growth opportunities that lie before us, many of which are still in their early stages. We are fortunate to have built strong operating platforms and leading-edge supply chain processes and technologies that provide us with ample 'fuel' to invest behind these opportunities and still maintain industry-leading profit margins." We continue to anticipate another solid year of cash flow from operations, which should approximate $600 million in 2006. Dividend Declared, Reflecting 90% Increase Announced in May The Board of Directors declared a cash dividend of $.55 per share, payable on September 18, 2006 to shareholders of record as of the close of business on September 8, 2006, consistent with the 90% increase in the indicated dividend rate announced in May. 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 effectively transition to a new distribution center supporting our domestic Outdoor businesses; VF's ability to maintain 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 second quarter conference call and webcast today at 8:30 a.m. ET. Interested parties should call 1-888-802-2280 domestic, or 1-913-312-1266 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 2, 2006 and can be accessed by dialing 1-888-203-1112 domestic, and 1-719-457-0820 international. The pass code is 1633243. 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 Six Months Ended June Ended June ----------------------- ----------------------- 2005 2005 2006 (see Note B) 2006 (see Note B) ----------- ----------- ----------- ----------- Net Sales $1,548,055 $1,435,831 $3,194,460 $2,999,474 Royalty Income 18,773 16,276 38,101 34,818 ----------- ----------- ----------- ----------- Total Revenues 1,566,828 1,452,107 3,232,561 3,034,292 ----------- ----------- ----------- ----------- Costs and Operating Expenses Cost of goods sold 911,842 841,812 1,876,400 1,757,376 Marketing, administrative and general expenses 493,779 456,511 992,007 936,626 ----------- ----------- ----------- ----------- 1,405,621 1,298,323 2,868,407 2,694,002 ----------- ----------- ----------- ----------- Operating Income 161,207 153,784 364,154 340,290 Other Income (Expense) Interest income 1,292 2,041 2,710 5,057 Interest expense (13,862) (18,490) (26,552) (37,164) Miscellaneous, net (84) (137) 798 (18) ----------- ----------- ----------- ----------- (12,654) (16,586) (23,044) (32,125) ----------- ----------- ----------- ----------- Income before Income Taxes and Cumulative Effect of a Change in Accounting Policy 148,553 137,198 341,110 308,165 Income Taxes 49,521 40,449 113,893 96,730 ----------- ----------- ----------- ----------- Income before Cumulative Effect of a Change in Accounting Policy 99,032 96,749 227,217 211,435 Cumulative Effect of a Change in Accounting Policy - - - (11,833) ----------- ----------- ----------- ----------- Net Income $ 99,032 $ 96,749 $ 227,217 $ 199,602 =========== =========== =========== =========== Earnings Per Common Share - Basic Income before cumulative effect of a change in accounting policy $ 0.90 $ 0.87 $ 2.06 $ 1.90 Cumulative effect of a change in accounting policy - - - (0.11) Net income 0.90 0.87 2.06 1.79 Earnings Per Common Share - Diluted Income before cumulative effect of a change in accounting policy 0.88 0.85 2.02 1.85 Cumulative effect of a change in accounting policy - - - (0.10) Net income 0.88 0.85 2.02 1.75 Weighted Average Shares Outstanding Basic 109,879 110,254 109,867 111,008 Diluted 112,539 113,283 112,440 114,138 Cash Dividends Per Common Share $ 0.55 $ 0.27 $ 0.84 $ 0.54 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 second quarter ends on the Saturday closest to June 30. For presentation purposes herein, all references to periods ended June 2006, December 2005 and June 2005 relate to the fiscal periods ended as of July 1, 2006, December 31, 2005 and July 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) June June December 2005 2006 2005 (see Note B) ----------- ---------- ----------- ASSETS Current Assets Cash and equivalents $ 161,672 $ 296,557 $ 249,517 Accounts receivable, net 892,732 764,184 792,747 Inventories 1,223,408 1,081,080 1,177,324 Other current assets 256,302 223,555 199,363 ----------- ----------- ----------- Total current assets 2,534,114 2,365,376 2,418,951 Property, Plant and Equipment 1,598,442 1,551,411 1,544,884 Less accumulated depreciation 991,421 987,356 985,297 ----------- ----------- ----------- 607,021 564,055 559,587 Intangible Assets 747,839 744,313 754,717 Goodwill 1,108,484 1,097,037 1,094,562 Other Assets 409,111 400,290 412,201 ----------- ----------- ----------- $5,406,569 $5,171,071 $5,240,018 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 229,145 $ 138,956 $ 256,090 Current portion of long-term debt 36,164 33,956 301,585 Accounts payable 456,095 451,900 384,757 Accrued liabilities 458,650 527,331 499,513 ----------- ----------- ----------- Total current liabilities 1,180,054 1,152,143 1,441,945 Long-term Debt 693,359 647,728 559,181 Other Liabilities 611,749 539,661 565,579 Commitments and Contingencies Redeemable Preferred Stock - 23,326 24,626 Common Stockholders' Equity Common Stock 110,640 110,108 111,095 Additional paid-in capital 1,368,082 1,277,486 1,218,995 Accumulated other comprehensive income (loss) (180,782) (164,802) (133,028) Retained earnings 1,623,467 1,585,421 1,451,625 ----------- ----------- ----------- Total common stockholders' equity 2,921,407 2,808,213 2,648,687 ----------- ----------- ----------- $5,406,569 $5,171,071 $5,240,018 =========== =========== =========== VF CORPORATION Consolidated Statements of Cash Flows (In thousands) Six Months Ended June --------------------- 2005 2006 (see Note B) --------- ---------- Operations Net income $ 227,217 $ 199,602 Adjustments to reconcile net income to cash provided by operating activities: Cumulative effect of a change in accounting policy - 11,833 Depreciation 47,525 47,633 Amortization of intangible assets 8,386 7,876 Other amortization 11,484 8,091 Stock-based compensation 29,523 25,641 Provision for doubtful accounts 325 6,475 Pension funding in excess of expense (52,442) (34,638) Other, net 4,243 (14,700) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (120,133) (36,288) Inventories (133,837) (190,535) Accounts payable 403 13,673 Accrued liabilities and other (42,722) (22,076) --------- --------- Cash provided (used) by operating activities (20,028) 22,587 Investments Capital expenditures (57,187) (50,722) Business acquisitions, net of cash acquired (3,893) (211,301) Software purchases (7,196) (9,484) Sale of VF Playwear business 4,666 6,667 Other, net 9,582 12,670 --------- --------- Cash used by investing activities (54,028) (252,170) Financing Increase in short-term borrowings 88,175 212,525 Payments on long-term debt (1,444) (100,743) Purchase of Common Stock (118,582) (116,066) Cash dividends paid (93,607) (61,309) Proceeds from issuance of Common Stock 53,542 63,614 Tax benefits of stock option exercises 7,824 10,928 --------- --------- Cash provided (used) by financing activities (64,092) 8,949 Effect of Foreign Currency Rate Changes on Cash 3,263 (15,356) --------- --------- Net Change in Cash and Equivalents (134,885) (235,990) Cash and Equivalents - Beginning of Year 296,557 485,507 --------- --------- Cash and Equivalents - End of Period $ 161,672 $ 249,517 ========= ========= VF CORPORATION Supplemental Financial Information Business Segment Information (In thousands) Three Months Ended June Six Months Ended June ----------------------- ----------------------- 2005 2005 2006 (see Note B) 2006 (see Note B) ----------- ----------- ---------- ----------- Coalition revenues Jeanswear $638,170 $601,974 $1,341,990 $1,315,476 Outdoor 371,047 300,434 756,692 585,815 Intimate Apparel 215,515 223,191 425,626 450,894 Imagewear 188,496 180,809 382,461 368,113 Sportswear 141,210 134,372 304,231 293,968 Other 12,390 11,327 21,561 20,026 ----------- ----------- ----------- ----------- Total coalition revenues $1,566,828 $1,452,107 $3,232,561 $3,034,292 =========== =========== =========== =========== Coalition profit Jeanswear $ 88,850 $91,827 (1) $211,873 $208,506 (1) Outdoor 42,355 41,712 92,947 73,437 Intimate Apparel 14,946 13,060 (2) 30,705 35,368 (2) Imagewear 29,107 24,157 59,158 53,727 Sportswear 17,885 18,562 38,338 44,991 Other 283 (204) (927) (928) ----------- ----------- ----------- ----------- Total coalition profit 193,426 189,114 432,094 415,101 Corporate and other expenses (32,303) (35,467) (67,142) (74,829) Interest, net (12,570) (16,449) (23,842) (32,107) ----------- ----------- ----------- ----------- Income before income taxes $148,553 $137,198 $341,110 $308,165 =========== =========== =========== =========== (1) Jeanswear coalition profit: As reported $ 91,827 $208,506 Special items included above (see page 9) (13,178) (13,178) ----------- ----------- As adjusted $78,649 $195,328 =========== =========== (2) Intimate Apparel coalition profit: As reported $ 13,060 $ 35,368 Special items included above (see page 9) 9,872 9,872 ----------- ----------- As adjusted $ 22,932 $ 45,240 =========== =========== VF CORPORATION Special Items Included in Second Quarter 2005 Operating Results (Dollars in thousands, except share amounts) Net Income EPS --------- --------- Special items included in 2005 operating income: Reductions of accruals totaling $14,194, primarily in Jeanswear, for postemployment benefits in Mexico that were greater than required by local laws $ 9,400 $ 0.08 Capacity alignment actions totaling $10,888, primarily in Intimate Apparel (7,200) (0.06) Special items included in 2005 income tax expense: Settlement of income tax matters in certain foreign jurisdictions 12,500 0.11 Tax impact of repatriation of foreign earnings under the American Jobs Creation Act of 2004 (7,000) (0.06) --------- --------- Total $7,700 $ 0.07 ========= ========= Reconciliation of Reported Operating Results with Certain Information Excluding 2005 Special Items Second Quarter --------------------------- Percent 2006 2005 Increase --------- --------- -------- Net income, as reported $99,032 $96,749 2% Special items - (7,700) --------- --------- Adjusted net income $99,032 $89,049 11% ========= ========= Earnings per share, as reported $ 0.88 $ 0.85 4% Special items - (0.07) --------- --------- Adjusted earnings per share $ 0.88 $ 0.78 13% ========= ========= Six Months Ended June ----------------------------- Percent 2006 2005 Increase --------- --------- -------- Income before cumulative effect of a change in accounting policy, as reported $227,217 $ 211,435 7% Special items - (7,700) --------- ---------- Adjusted income before cumulative effect of a change in accounting policy $227,217 $ 203,735 12% ========= ========== Earnings per share before cumulative effect of a change in accounting policy, as reported $ 2.02 $ 1.85 9% Special items - (0.07) --------- ---------- Adjusted earnings per share before cumulative effect of a change in accounting policy $ 2.02 $ 1.78 13% ========= ========== CONTACT: VF Services, Inc. Cindy Knoebel, 212-841-7141 or 336-424-6189