Exhibit 99 VF Announces Record Third Quarter Revenues and Earnings, Raises Full Year Guidance and Declares Dividend -- Strong Organic Revenue Growth of 12% Drives 11% Increase in EPS to $1.75 -- All Businesses - Outdoor, Jeanswear, Sportswear, Imagewear and Intimates - Achieve Higher Revenues -- 2006 Full Year Guidance Raised: Revenues Could Top $7 Billion, While EPS Expected to Be up 11% -- Quarterly Dividend of $.55 Per Share Declared Information Regarding VF's Third Quarter Conference Call Webcast Today Can Be Found at the End of This Release GREENSBORO, N.C.--(BUSINESS WIRE)--Oct. 20, 2006--VF Corporation (NYSE: VFC), a global leader in branded lifestyle apparel, today announced record results for the third quarter of 2006. All per share amounts are presented on a diluted basis. Revenues rose 12% to a record $2,033.8 million, compared with $1,822.1 million in the third quarter of 2005, driven by higher revenues across all our businesses. Net income in the current quarter increased 10% to a record $197.7 million, compared with $179.6 million in the prior year's quarter. Earnings per share rose 11% to a record $1.75 from $1.57. Foreign currency translation benefited revenues and earnings per share by $24 million and $.03, respectively, in the quarter. For the first nine months of 2006, revenues were up 8% to $5,266.3 million from $4,856.4 million in the 2005 period. Income rose 9%, to $424.9 million from $391.1 million, while earnings per share increased 10% to $3.77 from $3.43, before a $.10 per share cumulative effect of a change in accounting policy for stock compensation expense in the first quarter of 2005. "We are very pleased with our brands' strong performance this quarter. We have stepped up our investments in a number of areas, including product development, marketing and geographic expansion, and it's paying off in strong organic growth," said Mackey J. McDonald, chairman and chief executive officer. "We are committed to keeping our brands healthy and growing through such investments, while at the same time delivering strong earnings growth." Third Quarter Business Review Outdoor Our Outdoor coalition continues to have tremendous momentum, with total revenues up 25% to $659 million and strong gains across nearly every brand. Domestic revenues grew 20% in the quarter while international revenues rose 37%. The North Face(R), Vans(R), Napapijri(R) and Eastpak(R) brands each posted revenue gains in excess of 20%, while our Reef(R) and Kipling(R) brands also posted solid growth in the quarter. Operating income rose 25% in the quarter, while operating margins remained strong and stable, despite continued investments to support the future growth we expect from all our Outdoor brands. Jeanswear Our Jeanswear coalition, which includes our Wrangler(R), Lee(R) and Riders(R) brands, posted another quarter of healthy growth, with revenues up 6% and growth in both our domestic and international businesses. Domestic jeanswear revenues grew 5% with our Lee, Mass Market and Specialty businesses all growing at comparable rates. International revenues increased 8%, due primarily to the launch of our new majority-owned joint venture in India and foreign currency benefits. We continue to see strong growth in such markets as Mexico, China and Russia, where revenues are growing at double-digit rates. Jeanswear operating income declined slightly in the quarter, due primarily to marketing investments to support growth in our brands, particularly our Lee(R) and Wrangler(R) brands in the U.S. In addition, capacity actions to reduce future product costs resulted in higher expenses in the period. 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 6% in the quarter. Each brand achieved higher revenues in the quarter. Our Nautica(R) branded business enjoyed a revenue gain of 4%. Double-digit revenue gains were achieved in our Kipling(R) and John Varvatos(R) brands, as we continue to expand these businesses in the U.S. As anticipated, reflecting ongoing investments to support our new Nautica(R) women's sportswear initiative, operating income and margins declined during the quarter. Otherwise, operating margins would have been comparable to those in the prior year period. Imagewear Our Imagewear coalition continued its solid growth trend with a 6% revenue increase in the quarter, with gains in both our Image business, which includes uniforms for the industrial, public safety and service markets, and in our licensed apparel business. During the quarter, we announced a new agreement with ESPN to manufacture and market a line of College GameDay apparel, including tees, fleece crews and hoods. The line launched in September at leading sports specialty and sporting goods stores, in addition to better department stores, college campus retailers and online at ESPNShop.com. Imagewear operating income declined slightly. Operating margins dropped in the quarter due to investments and actions taken to support future top and bottom line growth, but remain at very healthy levels. Full year margins are expected to be up over prior year levels. Intimates Reversing the trend of the past several quarters, we are pleased that our Intimates coalition achieved a 5% increase in revenues in the period. Our department store and Private Brands businesses drove most of the increase, with success in new product introductions in both our Vanity Fair(R) and Lily of France(R) brands. We also experienced growth internationally in our Mexican and European boutique businesses. Intimates' operating income and margins were down from prior year levels, and are being impacted by provisions for higher than required inventory levels. During the quarter we opened 21 retail stores across a variety of brands including Vans(R), Kipling(R) and Napapijri(R), bringing our total number of owned retail stores to 560 at the end of the quarter. Total retail revenues grew 17% in the quarter. Overall gross margins expanded slightly in the quarter, to 42.3%. Operating margins remain strong at 15.1% but are down modestly from prior year levels, reflecting the higher costs associated with brand investments and other actions supporting future revenue and earnings growth. Our balance sheet remains in excellent shape. Very strong revenues in the month of September resulted in a sharp increase in accounts receivable, and also accounted for the lower than normal cash flow from operations for the nine month period. We continue to expect cash generated from operations to approximate $600 million for the year. Inventories increased at a lower rate than revenues, rising 2% versus the comparable quarter in 2005. Debt as a percent of total capital was 24.3% at the end of the quarter versus 27.3% at the end of the 2005 period. Outlook We continue to look forward to a very strong fourth quarter and our fourth consecutive year of record revenues and earnings. We now expect full year revenues to be up approximately 8% in 2006 - - surpassing the $7 billion mark for the first time in our company's history - with nearly all of the increase coming from organic growth. Earnings per share are now expected to rise 11% to approximately $5.05 over the $4.54 reported in 2005 before the cumulative effect adjustment. Accordingly, fourth quarter revenues should increase by about 6%, with earnings per share rising approximately 13%, indicating additional expansion in operating margins during the period. "We are confident that we have the pieces in place to continue to achieve our long-term growth and margin targets," said Mr. McDonald. "Most of our brands are strong and growing, and we have a robust pipeline of initiatives in place to support their continued growth. We continue to target a 14% operating margin and expect to make continued progress towards that goal in the coming months and years. We have the balance sheet and cash flow to fund additional acquisitions. And we are committed to returning cash to shareholders via our very strong dividend." Dividend Declared The Board of Directors declared a cash dividend of $.55 per share, payable on December 18, 2006 to shareholders of record as of the close of business on December 8, 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 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 and distributors 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 third quarter conference call and webcast today at 8:30 a.m. ET. Interested parties should call 1-800-289-0572 domestic, or 1-913-981-5543 international, to access the call. You may also access this call via the Internet at www.vfc.com. A replay will be available through November 2, 2006 and can be accessed by dialing 1-888-203-1112 domestic, and 1-719-457-0820 international. The pass code is 2436709. 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 Nine Months Ended September September ----------------------------------------------- 2006 2005 2006 2005 ----------------------- ----------------------- Net Sales $2,015,213 $1,803,064 $5,209,673 $4,802,538 Royalty Income 18,576 19,022 56,677 53,840 ----------------------- ----------------------- Total Revenues 2,033,789 1,822,086 5,266,350 4,856,378 ----------------------- ----------------------- Costs and Operating Expenses Cost of goods sold 1,173,149 1,055,613 3,049,549 2,812,989 Marketing, administrative and general expenses 553,871 478,471 1,545,878 1,415,097 ----------------------- ----------------------- 1,727,020 1,534,084 4,595,427 4,228,086 ----------------------- ----------------------- Operating Income 306,769 288,002 670,923 628,292 Other Income (Expense) Interest income 1,439 1,402 4,149 6,459 Interest expense (15,842) (19,357) (42,394) (56,521) Miscellaneous, net 1,272 819 2,070 801 ----------------------- ----------------------- (13,131) (17,136) (36,175) (49,261) ----------------------- ----------------------- Income before Income Taxes and Cumulative Effect of a Change in Accounting Policy 293,638 270,866 634,748 579,031 Income Taxes 95,931 91,236 209,824 187,966 ----------------------- ----------------------- Income before Cumulative Effect of a Change in Accounting Policy 197,707 179,630 424,924 391,065 Cumulative Effect of a Change in Accounting Policy - - - (11,833) ----------------------- ----------------------- Net Income $ 197,707 $ 179,630 $ 424,924 $ 379,232 ======================= ======================= Earnings Per Common Share - Basic Income before cumulative effect of a change in accounting policy $ 1.78 $ 1.61 $ 3.85 $ 3.51 Cumulative effect of a change in accounting policy - - - (0.11) Net income 1.78 1.61 3.85 3.40 Earnings Per Common Share - Diluted Income before cumulative effect of a change in accounting policy 1.75 1.57 3.77 3.43 Cumulative effect of a change in accounting policy - - - (0.10) Net income 1.75 1.57 3.77 3.32 Weighted Average Shares Outstanding Basic 110,802 111,114 110,179 111,043 Diluted 113,062 114,146 112,649 114,139 Cash Dividends Per Common Share $ 0.55 $ 0.27 $ 1.39 $ 0.81 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 third quarter ends on the Saturday closest to September 30. For presentation purposes herein, all references to periods ended September 2006, December 2005 and September 2005 relate to the fiscal periods ended as of September 30, 2006, December 31, 2005 and October 1, 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) September December September 2006 2005 2005 ----------- ----------- ----------- ASSETS Current Assets Cash and equivalents $ 154,196 $ 296,557 $ 215,549 Accounts receivable, net 1,191,303 764,184 950,649 Inventories 1,196,154 1,081,080 1,170,098 Other current assets 223,814 223,555 199,464 ----------- ----------- ----------- Total current assets 2,765,467 2,365,376 2,535,760 Property, Plant and Equipment 1,601,144 1,551,411 1,535,247 Less accumulated depreciation 993,943 987,356 978,079 ----------- ----------- ----------- 607,201 564,055 557,168 Intangible Assets 761,895 744,313 749,997 Goodwill 1,133,790 1,097,037 1,095,146 Other Assets 408,104 400,290 418,520 ----------- ----------- ----------- $5,676,457 $5,171,071 $5,356,591 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 302,641 $ 138,956 $ 181,017 Current portion of long-term debt 35,670 33,956 333,665 Accounts payable 395,891 451,900 356,438 Accrued liabilities 511,579 527,331 577,750 ----------- ----------- ----------- Total current liabilities 1,245,781 1,152,143 1,448,870 Long-term Debt 665,475 647,728 527,511 Other Liabilities 642,075 539,661 580,722 Commitments and Contingencies Redeemable Preferred Stock - 23,326 24,083 Common Stockholders' Equity Common Stock 111,208 110,108 110,887 Additional paid-in capital 1,407,986 1,277,486 1,261,506 Accumulated other comprehensive income (loss) (155,956) (164,802) (140,607) Retained earnings 1,759,888 1,585,421 1,543,619 ----------- ----------- ----------- Total common stockholders' equity 3,123,126 2,808,213 2,775,405 ----------- ----------- ----------- $5,676,457 $5,171,071 $5,356,591 =========== =========== =========== VF CORPORATION Consolidated Statements of Cash Flows (In thousands) Nine Months Ended September --------------------- 2006 2005 ---------- ---------- Operating Activities Net income $ 424,924 $ 379,232 Adjustments to reconcile net income to cash provided by operating activities: Cumulative effect of a change in accounting policy - 11,833 Depreciation 72,190 72,348 Amortization of intangible assets 13,130 12,111 Other amortization 16,352 11,838 Stock-based compensation 39,209 35,794 Pension funding in excess of expense (42,901) (24,536) Other, net 1,700 (6,692) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (408,290) (199,095) Inventories (95,205) (179,913) Accounts payable (66,126) (16,094) Accrued liabilities and other 71,959 44,817 ---------- ---------- Cash provided by operating activities 26,942 141,643 Investing Activities Capital expenditures (79,552) (75,864) Business acquisitions, net of cash acquired (40,378) (212,286) Software purchases (8,609) (13,008) Sale of VF Playwear business 4,860 6,667 Other, net 10,001 18,528 ---------- ---------- Cash used by investing activities (113,678) (275,963) Financing Activities Increase in short-term borrowings 154,802 136,464 Payments on long-term debt (34,519) (101,189) Purchase of Common Stock (118,582) (175,136) Cash dividends paid (154,775) (91,757) Proceeds from issuance of Common Stock 79,699 92,751 Tax benefits of stock option exercises 12,063 16,433 Other, net - (181) ---------- ---------- Cash used by financing activities (61,312) (122,615) Effect of Foreign Currency Rate Changes on Cash 5,687 (13,023) ---------- ---------- Net Change in Cash and Equivalents (142,361) (269,958) Cash and Equivalents -- Beginning of Year 296,557 485,507 ---------- ---------- Cash and Equivalents -- End of Period $ 154,196 $ 215,549 ========== ========== VF CORPORATION Supplemental Financial Information Business Segment Information (In thousands) Three Months Ended Nine Months Ended September September ----------------------------------------------- 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Coalition revenues Jeanswear $ 738,171 $ 694,746 $2,080,161 $2,010,222 Outdoor 658,987 525,171 1,415,679 1,110,986 Intimate Apparel 223,691 213,768 649,317 664,662 Imagewear 215,743 203,045 598,204 571,158 Sportswear 183,995 173,934 488,226 467,902 Other 13,202 11,422 34,763 31,448 ----------- ----------- ----------- ----------- Total coalition revenues $2,033,789 $1,822,086 $5,266,350 $4,856,378 =========== =========== =========== =========== Coalition profit Jeanswear $ 117,766 $ 121,893 $ 329,639 $ 330,399 Outdoor 139,606 111,243 232,553 184,680 Intimate Apparel 18,512 21,052 49,217 56,420 Imagewear 33,733 36,808 92,892 90,535 Sportswear 24,919 28,788 63,257 73,779 Other 405 (1,518) (522) (2,446) ----------- ----------- ----------- ----------- Total coalition profit 334,941 318,266 767,036 733,367 Corporate and other expenses (26,900) (29,445) (94,043) (104,274) Interest, net (14,403) (17,955) (38,245) (50,062) ----------- ----------- ----------- ----------- Income before income taxes and cumulative effect of a change in accounting policy $ 293,638 $ 270,866 $ 634,748 $ 579,031 =========== =========== =========== =========== CONTACT: VF Services, Inc. Cindy Knoebel, 212-841-7141 or 336-424-6189 CFA VP, Financial & Corporate Communications