V F CORP - Quarter Report: 2014 June (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 28, 2014

Commission file number: 1-5256

V. F. CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania

23-1180120

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification number)

105 Corporate Center Boulevard

Greensboro, North Carolina 27408

(Address of principal executive offices)

(336) 424-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

On July 26, 2014, there were 431,100,626 shares of the registrant’s common stock outstanding.

VF CORPORATION

Table of Contents


	Page No.

Part I — Financial Information

Item 1 — Financial Statements (Unaudited)

Consolidated Balance Sheets: June 2014, December 2013 and June 2013		3

Consolidated Statements of Income: Three and six months ended June 2014 and June 2013		4

Consolidated Statements of Comprehensive Income: Three and six months ended June 2014 and June 2013		5

Consolidated Statements of Cash Flows: Six months ended June 2014 and June 2013		6

Consolidated Statements of Stockholders’ Equity: Year ended December 2013 and six months ended June 2014		7

Notes to Consolidated Financial Statements		8

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3 — Quantitative and Qualitative Disclosures about Market Risk		28

Item 4 — Controls and Procedures		28

Part II — Other Information

Item 1 — Legal Proceedings		28

Item 1A — Risk Factors		28

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		29

Item 6 — Exhibits		29

Signatures		30

Part I — Financial Information

Item 1 — Financial Statements (Unaudited)

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts)


	June			December			June
	2014			2013			2013
ASSETS
Current assets
Cash and equivalents	$	475,891		$	776,403		$	320,112
Accounts receivable, less allowance for doubtful accounts of: June 2014 – $44,747; December 2013 – $45,350; June 2013 – $52,500		1,178,874			1,360,443			1,060,778
Inventories		1,615,245			1,399,062			1,522,809
Other current assets		509,902			347,074			394,008

Total current assets		3,779,912			3,882,982			3,297,707
Property, plant and equipment		921,970			932,792			883,197
Intangible assets		2,921,335			2,960,201			2,889,106
Goodwill		2,018,997			2,021,750			2,001,375
Other assets		573,113			517,718			478,182

Total assets	$	10,215,327		$	10,315,443		$	9,549,567

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	581,120		$	18,810		$	46,350
Current portion of long-term debt		4,334			5,167			402,949
Accounts payable		537,192			638,732			555,719
Accrued liabilities		747,678			905,292			639,280

Total current liabilities		1,870,324			1,568,001			1,644,298
Long-term debt		1,425,123			1,426,829			1,427,823
Other liabilities		1,266,512			1,243,575			1,293,389
Commitments and contingencies
Stockholders’ equity
Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at June 2014, December 2013 or June 2013		—			—			—
Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at June 2014 – 430,890,659; December 2013 – 440,310,370; June 2013 – 438,838,624		107,723			110,078			109,710
Additional paid-in capital		2,875,240			2,746,590			2,666,117
Accumulated other comprehensive income (loss)		(232,212	)		(211,720	)		(440,871	)
Retained earnings		2,902,617			3,432,090			2,849,101

Total stockholders’ equity		5,653,368			6,077,038			5,184,057

Total liabilities and stockholders’ equity	$	10,215,327		$	10,315,443		$	9,549,567

See notes to consolidated financial statements.

VF CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June						Six Months Ended June
	2014			2013			2014			2013
Net sales	$	2,373,408		$	2,194,727		$	5,123,523		$	4,776,957
Royalty income		28,668			25,684			59,331			55,323

Total revenues		2,402,076			2,220,411			5,182,854			4,832,280

Costs and operating expenses
Cost of goods sold		1,239,344			1,143,358			2,645,910			2,498,635
Selling, general and administrative expenses		942,924			875,719			1,913,946			1,774,583

		2,182,268			2,019,077			4,559,856			4,273,218

Operating income		219,808			201,334			622,998			559,062
Interest income		1,519			815			2,850			1,305
Interest expense		(21,338	)		(21,534	)		(41,975	)		(42,542	)
Other income (expense), net		(508	)		(1,512	)		(2,600	)		(473	)

Income before income taxes		199,481			179,103			581,273			517,352
Income taxes		41,799			40,829			126,398			108,661

Net income	$	157,682		$	138,274		$	454,875		$	408,691

Earnings per common share
Basic	$	0.37		$	0.32		$	1.05		$	0.93
Diluted		0.36			0.31			1.03			0.91
Cash dividends per common share	$	0.2625		$	0.2175		$	0.5250		$	0.4350

See notes to consolidated financial statements.

VF CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended June						Six Months Ended June
	2014			2013			2014			2013
Net income	$	157,682		$	138,274		$	454,875		$	408,691

Other comprehensive income (loss)
Foreign currency translation
Gains (losses) arising during the period		(25,832	)		(22,076	)		(36,734	)		(39,021	)
Less income tax effect		(703	)		(2,774	)		612			373
Defined benefit pension plans
Amortization of net deferred actuarial losses		9,389			21,326			18,773			42,688
Amortization of deferred prior service costs		1,362			316			2,724			657
Less income tax effect		(4,108	)		(8,748	)		(8,233	)		(17,592	)
Derivative financial instruments
Gains (losses) arising during the period		(11,461	)		(3,093	)		(7,765	)		52,400
Less income tax effect		4,504			1,215			3,051			(20,594	)
Reclassification to net income for (gains) losses realized		7,407			(5,298	)		12,823			(9,136	)
Less income tax effect		(2,911	)		2,082			(5,039	)		3,590
Marketable securities
Gains (losses) arising during the period		(611	)		(815	)		(1,160	)		(470	)
Less income tax effect		241			129			456			129

Other comprehensive income (loss)		(22,723	)		(17,736	)		(20,492	)		13,024

Comprehensive income	$	134,959		$	120,538		$	434,383		$	421,715

See notes to consolidated financial statements.

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June
	2014			2013
Operating activities
Net income	$	454,875		$	408,691
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		83,474			73,588
Amortization of intangible assets		22,454			22,992
Other amortization		25,273			20,135
Stock-based compensation		53,580			47,879
Provision for doubtful accounts		4,089			9,208
Pension expense in excess of (less than) contributions		17,673			(65,994	)
Other, net		4,810			57,074
Changes in operating assets and liabilities:
Accounts receivable		174,448			133,830
Inventories		(220,187	)		(178,511	)
Other current assets		(33,420	)		(59,643	)
Accounts payable		(100,841	)		(3,104	)
Accrued compensation		(30,341	)		(38,851	)
Accrued income taxes		(174,251	)		(105,035	)
Accrued liabilities		(61,704	)		(24,233	)
Other assets and liabilities		(345	)		(6,613	)

Cash provided by operating activities		219,587			291,413
Investing activities
Capital expenditures		(95,844	)		(155,454	)
Software purchases		(56,042	)		(28,715	)
Other, net		(11,701	)		(4,307	)

Cash used by investing activities		(163,587	)		(188,476	)
Financing activities
Net increase in short-term borrowings		562,315			34,783
Payments on long-term debt		(2,697	)		(1,417	)
Purchases of treasury stock		(727,536	)		(281,586	)
Cash dividends paid		(227,625	)		(191,460	)
Proceeds from issuance of Common Stock, net of shares withheld for taxes		4,333			26,069
Tax benefits of stock-based compensation		39,195			37,933

Cash used by financing activities		(352,015	)		(375,678	)
Effect of foreign currency rate changes on cash and equivalents		(4,497	)		(4,608	)

Net change in cash and equivalents		(300,512	)		(277,349	)
Cash and equivalents — beginning of year		776,403			597,461

Cash and equivalents — end of period	$	475,891		$	320,112

See notes to consolidated financial statements.

VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)


									Accumulated
							Additional		Other
	Common Stock						Paid-in		Comprehensive			Retained
	Shares			Amounts			Capital		Income (Loss)			Earnings
In thousands, except share amounts
Balance, December 2012		440,818,936		$	110,205		$	2,527,868	$	(453,895	)	$	2,941,447
Net income		—			—			—		—			1,210,119
Dividends on Common Stock		—			—			—		—			(402,136	)
Purchases of treasury stock		(6,849,160	)		(1,712	)		—		—			(280,408	)
Stock-based compensation, net		6,340,594			1,585			218,722		—			(36,932	)
Foreign currency translation		—			—			—		110,715			—
Defined benefit pension plans		—			—			—		143,087			—
Derivative financial instruments		—			—			—		(12,324	)		—
Marketable securities		—			—			—		697			—

Balance, December 2013		440,310,370			110,078			2,746,590		(211,720	)		3,432,090
Net income		—			—			—		—			454,875
Dividends on Common Stock		—			—			—		—			(227,625	)
Purchases of treasury stock		(12,033,300	)		(3,008	)		—		—			(724,528	)
Stock-based compensation, net		2,613,589			653			128,650		—			(32,195	)
Foreign currency translation		—			—			—		(36,122	)		—
Defined benefit pension plans		—			—			—		13,264			—
Derivative financial instruments		—			—			—		3,070			—
Marketable securities		—			—			—		(704	)		—

Balance, June 2014		430,890,659		$	107,723		$	2,875,240	$	(232,212	)	$	2,902,617

See notes to consolidated financial statements.

VF CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

Note A – Basis of Presentation

VF Corporation (together with its subsidiaries, collectively known as “VF”) uses a 52/53 week fiscal year ending on the Saturday closest to December 31 of each year. For presentation purposes herein, all references to periods ended June 2014, December 2013 and June 2013 relate to the fiscal periods ended on June 28, 2014, December 28, 2013 and June 29, 2013, respectively.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles (“GAAP”) in the United States of America for complete financial statements. Similarly, the December 2013 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal and recurring adjustments necessary to fairly present the consolidated financial position, results of operations and cash flows of VF for the interim periods presented. Operating results for the three and six months ended June 2014 are not necessarily indicative of results that may be expected for any other interim period or for the year ending January 3, 2015. For further information, refer to the consolidated financial statements and notes included in VF’s Annual Report on Form 10-K for the year ended December 2013 (“2013 Form 10-K”).

Note B – Sale of Accounts Receivable

VF has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis. Under the agreement, up to $237.5 million of accounts receivable may be sold to the financial institution and remain outstanding at any point in time. After the sale, VF does not retain any interests in the accounts receivable and removes them from the Consolidated Balance Sheets, but continues to service and collect outstanding accounts receivable on behalf of the financial institution. At June 2014, December 2013 and June 2013, accounts receivable had been reduced by $138.4 million, $136.4 million and $118.6 million, respectively, related to this program. During the first six months of 2014, VF sold $557.8 million of accounts receivable at their stated amounts, less a funding fee charged by the financial institution. The funding fee is recorded in other income (expense), net, and totaled $0.8 million for the first six months of 2014. Net proceeds of this program are classified in operating activities in the Consolidated Statements of Cash Flows.

Note C – Inventories


	June		December		June
In thousands	2014		2013		2013
Finished products	$	1,362,069	$	1,159,555	$	1,270,901
Work in process		104,039		94,586		99,776
Raw materials		149,137		144,921		152,132

Total inventories	$	1,615,245	$	1,399,062	$	1,522,809

Note D – Property, Plant and Equipment


	June		December		June
In thousands	2014		2013		2013
Land and improvements	$	56,962	$	56,828	$	52,764
Buildings and improvements		988,980		953,931		915,805
Machinery and equipment		1,191,219		1,159,221		1,119,890

Property, plant and equipment, at cost		2,237,161		2,169,980		2,088,459
Less accumulated depreciation and amortization		1,315,191		1,237,188		1,205,262

Property, plant and equipment, net	$	921,970	$	932,792	$	883,197

Note E – Intangible Assets


	Weighted		June 2014						December 2013
	Average						Net		Net
	Amortization				Accumulated		Carrying		Carrying
Dollars in thousands	Period	Amortization methods	Cost		Amortization		Amount		Amount
Amortizable intangible assets:
Customer relationships	20 years	Accelerated	$	625,359	$	223,934	$	401,425	$	417,439
License agreements	24 years	Accelerated and straight-line		184,171		82,369		101,802		107,789
Other	8 years	Straight-line		15,796		11,556		4,240		6,524

Amortizable intangible assets, net								507,467		531,752

Indefinite-lived intangible assets:
Trademarks and trade names								2,413,868		2,428,449

Intangible assets, net							$	2,921,335	$	2,960,201

Amortization expense for the second quarter and first six months of 2014 was $11.2 million and $22.5 million, respectively. Estimated amortization expense for the next five years is:


In millions Year	Estimated Amortization Expense
2014	$	44.7
2015		41.8
2016		40.5
2017		39.3
2018		38.7

Note F – Goodwill

Changes in goodwill are summarized by business segment as follows:


	Outdoor &									Contemporary
In thousands	Action Sports			Jeanswear		Imagewear		Sportswear		Brands		Total
Balance, December 2013	$	1,434,898		$	228,430	$	58,747	$	157,314	$	142,361	$	2,021,750
Currency translation		(2,872	)		119		—		—		—		(2,753	)

Balance, June 2014	$	1,432,026		$	228,549	$	58,747	$	157,314	$	142,361	$	2,018,997

Accumulated impairment charges for the Outdoor & Action Sports, Sportswear and Contemporary Brands Coalitions were $43.4 million, $58.5 million and $195.2 million, respectively, for the periods presented above. No impairment charges were recorded in the first six months of 2014.

Note G – Pension Plans

The components of pension cost for VF’s defined benefit plans were as follows:


	Three Months Ended June						Six Months Ended June
In thousands	2014			2013			2014			2013
Service cost – benefits earned during the period	$	6,097		$	6,327		$	12,182		$	13,220
Interest cost on projected benefit obligations		20,404			17,978			40,793			36,029
Expected return on plan assets		(22,697	)		(23,628	)		(45,378	)		(47,310	)
Amortization of deferred amounts:
Net deferred actuarial losses		9,389			21,326			18,773			42,688
Deferred prior service costs		1,362			316			2,724			657

Net periodic pension cost	$	14,555		$	22,319		$	29,094		$	45,284

During the first six months of 2014, VF contributed $11.4 million to its defined benefit plans. VF intends to make approximately $9.1 million of additional contributions during the remainder of 2014.

Note H – Capital and Accumulated Other Comprehensive Income (Loss)

During the first six months of 2014, the Company repurchased 12.0 million shares of Common Stock in open market transactions for $725.5 million under its share repurchase program authorized by VF’s Board of Directors. These transactions were treated as treasury stock transactions during the first six months of 2014.

Common Stock outstanding is net of shares held in treasury which are, in substance, retired. During the first six months of 2014, VF restored 12.0 million treasury shares to an unissued status. There were no shares held in treasury at the end of June 2014 or December 2013, and 17.0 million shares held in treasury at the end of June 2013. The excess of the cost of treasury shares acquired over the $0.25 per share stated value of Common Stock is deducted from retained earnings.

VF Common Stock is also held by the Company’s deferred compensation plans and is treated as treasury shares for financial reporting purposes. During the first half of 2014, the Company purchased 33,300 shares of Common Stock in open market transaction for $2.0 million. Balances related to shares held for deferred compensation plans are as follows:


	June		December		June
In millions, except share amounts	2014		2013		2013
Shares held for deferred compensation plans		695,204		704,104		733,664
Cost of shares held for deferred compensation plans	$	8.2	$	8.4	$	8.7

Accumulated Other Comprehensive Income (Loss)

Comprehensive income consists of net income and specified components of other comprehensive income (“OCI”). OCI consists of changes in assets and liabilities that are not included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders’ equity in the balance sheet. VF’s comprehensive income is presented in the Consolidated Statements of Comprehensive Income. The deferred components of other comprehensive income (loss) are reported, net of related income taxes, in accumulated other comprehensive income (loss) in stockholders’ equity, as follows:


	June			December			June
In thousands	2014			2013			2013
Foreign currency translation	$	70,525		$	106,647		$	(42,716	)
Defined benefit pension plans		(264,187	)		(277,451	)		(394,785	)
Derivative financial instruments		(38,684	)		(41,754	)		(3,170	)
Marketable securities		134			838			(200	)

Accumulated other comprehensive income (loss)	$	(232,212	)	$	(211,720	)	$	(440,871	)

The changes in accumulated other comprehensive income (loss), net of related taxes, are as follows:


	Three Months Ended June 2014
	Foreign			Defined			Derivative
	Currency			Benefit			Financial			Marketable
In thousands	Translation			Pension Plans			Instruments			Securities			Total
Balance, March 2014	$	97,060		$	(270,830	)	$	(36,223	)	$	504		$	(209,489	)

Other comprehensive income (loss) before reclassifications		(26,535	)		—			(6,957	)		(370	)		(33,862	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			6,643			4,496			—			11,139

Net other comprehensive income (loss)		(26,535	)		6,643			(2,461	)		(370	)		(22,723	)

Balance, June 2014	$	70,525		$	(264,187	)	$	(38,684	)	$	134		$	(232,212	)


	Three Months Ended June 2013
In thousands	Foreign Currency Translation			Defined Benefit Pension Plans			Derivative Financial Instruments			Marketable Securities			Total
Balance, March 2013	$	(17,866	)	$	(407,679	)	$	1,924		$	486		$	(423,135	)

Other comprehensive income (loss) before reclassifications		(24,850	)		—			(1,878	)		(686	)		(27,414	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			12,894			(3,216	)		—			9,678

Net other comprehensive income (loss)		(24,850	)		12,894			(5,094	)		(686	)		(17,736	)

Balance, June 2013	$	(42,716	)	$	(394,785	)	$	(3,170	)	$	(200	)	$	(440,871	)


	Six Months Ended June 2014
	Foreign			Defined			Derivative
	Currency			Benefit			Financial			Marketable
In thousands	Translation			Pension Plans			Instruments			Securities			Total
Balance, December 2013	$	106,647		$	(277,451	)	$	(41,754	)	$	838		$	(211,720	)

Other comprehensive income (loss) before reclassifications		(36,122	)		—			(4,714	)		(704	)		(41,540	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			13,264			7,784			—			21,048

Net other comprehensive income (loss)		(36,122	)		13,264			3,070			(704	)		(20,492	)

Balance, June 2014	$	70,525		$	(264,187	)	$	(38,684	)	$	134		$	(232,212	)


	Six Months Ended June 2013
In thousands	Foreign Currency Translation			Defined Benefit Pension Plans			Derivative Financial Instruments			Marketable Securities			Total
Balance, December 2012	$	(4,068	)	$	(420,538	)	$	(29,430	)	$	141		$	(453,895	)

Other comprehensive income (loss) before reclassifications		(38,648	)		—			31,806			(341	)		(7,183	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			25,753			(5,546	)		—			20,207

Net other comprehensive income (loss)		(38,648	)		25,753			26,260			(341	)		13,024

Balance, June 2013	$	(42,716	)	$	(394,785	)	$	(3,170	)	$	(200	)	$	(440,871	)

Reclassifications out of accumulated other comprehensive income (loss) are as follows:


In thousands	Affected Line Item in the
Details About Accumulated Other	Consolidated Statements	Three Months Ended June						Six Months Ended June
Comprehensive Income (Loss) Components	of Income	2014			2013			2014			2013
Amortization of defined benefit pension plans:
Net deferred actuarial losses	^(a)	$	(9,389	)	$	(21,326	)	$	(18,773	)	$	(42,688	)
Deferred prior service costs	^(a)		(1,362	)		(316	)		(2,724	)		(657	)

	Total before tax		(10,751	)		(21,642	)		(21,497	)		(43,345	)
	Tax benefit (expense)		4,108			8,748			8,233			17,592

	Net of tax	$	(6,643	)	$	(12,894	)	$	(13,264	)	$	(25,753	)

Gains (losses) on derivative financial instruments:
Foreign exchange contracts	Net sales	$	(1,542	)	$	1,378		$	118		$	1,223
Foreign exchange contracts	Cost of goods sold		(4,339	)		3,683			(9,703	)		7,541
Foreign exchange contracts	Other income (expense), net		(507	)		1,209			(1,215	)		2,301
Interest rate contracts	Interest expense		(1,019	)		(972	)		(2,023	)		(1,929	)

	Total before tax		(7,407	)		5,298			(12,823	)		9,136
	Tax benefit (expense)		2,911			(2,082	)		5,039			(3,590	)

	Net of tax	$	(4,496	)	$	3,216		$	(7,784	)	$	5,546

Total reclassifications for the period	Net of tax	$	(11,139	)	$	(9,678	)	$	(21,048	)	$	(20,207	)

^(a)	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note G for additional details).

Note I – Stock-based Compensation

During the second quarter of 2014, VF did not grant any stock-based compensation awards.

During the first quarter of 2014, VF granted options to employees and nonemployee members of VF’s Board of Directors to purchase 2,777,130 shares of Common Stock at an exercise price of $56.79 per share. The exercise price of each option granted was equal to the fair market value of VF Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years. Options granted to members of VF’s Board of Directors become exercisable one year from the date of grant. The grant date fair value of each option award is calculated using a lattice option–pricing valuation model, which incorporates a range of assumptions for inputs as follows:


		Six Months Ended
		June 2014
Expected volatility		23% to 29%
Weighted average expected volatility		26%
Expected term (in years)		5.5 to 7.3
Dividend yield		2.1%
Risk-free interest rate		0.1% to 2.7%
Weighted average fair value at date of grant		$12.00

Also during the first quarter of 2014, VF granted 576,544 performance-based restricted stock units (“RSU”) to employees that enable them to receive shares of VF Common Stock at the end of a three year period. Each RSU has a potential final value ranging from zero to two shares of VF Common Stock. The number of shares earned by participants, if any, is based on achievement of a three year profitability goal and annually established performance goals set by the Compensation Committee of the Board of Directors. Shares are issued to participants in the year following the conclusion of each three year performance period. The fair market value of VF Common Stock at the date the units were granted was $56.79 per share.

The actual number of performance-based RSUs earned may also be adjusted upward or downward by 25% of the target award, based on how VF’s total stockholder return (“TSR”) over the three year period compares to the TSR for companies included in the Standard & Poor’s 500 Index. The grant date fair value of the TSR-based adjustment related to the 2014 RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $1.41 per share.

VF granted 12,595 nonperformance-based restricted stock units to members of the Board of Directors during the first quarter of 2014. These units vest upon grant and will be settled in shares of VF Common Stock one year from the date of grant. The fair market value of VF Common Stock at the date the units were granted was $56.79 per share.

VF granted 17,000 nonperformance-based restricted stock units to employees during the first quarter of 2014. These units vest four years from the date of grant and each RSU entitles the holder to one share of VF Common Stock. The fair market value of VF Common Stock at the date the units were granted was $58.89 per share.

VF granted 87,000 restricted shares of VF Common Stock to employees during the first quarter of 2014. These shares generally vest four years from the date of grant. The fair market value of VF Common Stock at the date the units were granted was $58.89 per share.

Note J – Income Taxes

The effective income tax rate for the first half of 2014 was 21.7% compared with 21.0% in the first half of 2013. The first six months of 2014 included a net discrete tax benefit of $15.5 million, which included $4.1 million of prior year refund claims and $8.5 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, reducing the effective income tax rate by 2.7%. The first six months of 2013 included a net discrete tax benefit of $14.4 million, which included $8.3 million of tax benefits related to the extension of certain tax credits and other provisions of the Internal Revenue Code enacted in 2013 which were retroactive to 2012, and $6.9 million of tax benefits related to the realization of previously unrecognized tax benefits and interest, reducing the effective income tax rate by 2.8%. Without discrete items, the effective tax rate for the first half of 2014 increased by 0.6% compared with the 2013 period primarily due to the impact of tax law changes in the U.S.

VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous states and foreign jurisdictions. In the U.S., the Internal Revenue Service (“IRS”) examination for tax years 2007, 2008 and 2009 was completed in 2012. VF has appealed the results of the 2007 to 2009 examination to the IRS Appeals office. Tax years prior to 2007 have been effectively settled with the IRS. The IRS commenced its examination of VF’s 2010 and 2011 tax returns during the fourth quarter of 2013, and such examination is still ongoing. During the second quarter of 2014, the IRS completed its examination of Timberland’s 2010 tax return. The examination of Timberland’s 2011 tax return is still ongoing. In addition, VF is currently subject to examinations by various state and foreign tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years, and has concluded that VF’s provision for income taxes is sufficient. The outcome of any one examination is not expected to have a material impact on VF’s consolidated financial statements. Management believes that some of these examinations and negotiations will conclude during the next 12 months.

During the first half of 2014, the amount of net unrecognized tax benefits and associated interest decreased by $2.4 million to $107.1 million. Management believes that it is reasonably possible that the amount of unrecognized income tax benefits and interest may decrease during the next 12 months by approximately $35.0 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, of which $28.1 million would reduce income tax expense.

Note K – Business Segment Information

VF’s businesses are grouped into product categories, and by brands within those product categories, for internal financial reporting used by management. These groupings of businesses within VF are referred to as “coalitions” and are the basis for VF’s reportable segments. Financial information for VF’s reportable segments is as follows:


	Three Months Ended June						Six Months Ended June
In thousands	2014			2013			2014			2013
Coalition revenues:
Outdoor & Action Sports	$	1,279,144		$	1,103,608		$	2,853,791		$	2,487,882
Jeanswear		605,838			611,749			1,296,168			1,329,678
Imagewear		249,963			241,827			513,202			494,584
Sportswear		140,102			133,478			271,607			261,711
Contemporary Brands		96,186			98,614			194,355			202,341
Other		30,843			31,135			53,731			56,084

Total coalition revenues	$	2,402,076		$	2,220,411		$	5,182,854		$	4,832,280

Coalition profit:
Outdoor & Action Sports	$	130,684		$	100,458		$	405,174		$	326,960
Jeanswear		100,137			108,874			229,403			252,217
Imagewear		35,317			35,059			73,089			66,645
Sportswear		10,267			16,278			22,822			28,494
Contemporary Brands		8,840			7,878			16,742			20,454
Other		(74	)		509			(3,190	)		(2,148	)

Total coalition profit		285,171			269,056			744,040			692,622
Corporate and other expenses		(65,871	)		(69,234	)		(123,642	)		(134,033	)
Interest expense, net		(19,819	)		(20,719	)		(39,125	)		(41,237	)

Income before income taxes	$	199,481		$	179,103		$	581,273		$	517,352

Note L – Earnings Per Share


In thousands, except per share amounts	Three Months Ended June				Six Months Ended June
In thousands, except per share amounts	2014		2013		2014		2013
Earnings per share – basic:
Net income	$	157,682	$	138,274	$	454,875	$	408,691

Weighted average common shares outstanding		429,940		437,096		434,115		438,684

Earnings per common share	$	0.37	$	0.32	$	1.05	$	0.93

Earnings per share – diluted:
Net income	$	157,682	$	138,274	$	454,875	$	408,691

Weighted average common shares outstanding		429,940		437,096		434,115		438,684
Incremental shares from stock options and other dilutive securities		7,191		8,820		7,584		8,220

Adjusted weighted average common shares outstanding		437,131		445,916		441,699		446,904

Earnings per common share	$	0.36	$	0.31	$	1.03	$	0.91

Outstanding options to purchase 2.7 million shares of Common Stock for the three month period ended June 2014 were excluded from the calculation of diluted earnings per share because the effect of their inclusion would have been antidilutive. For the quarter ended June 2013, all outstanding options to purchase Common Stock were dilutive and included in the calculation of diluted earnings per share. Outstanding options to purchase 2.7 million and 1.8 million shares of Common Stock for the six month periods ended June 2014 and 2013, respectively, were excluded from the calculations of diluted earnings per share because the effect of their inclusion would have been antidilutive. In addition, 1.3 million and 1.5 million of performance-based restricted stock units were excluded from the computation of diluted earnings per share for the three and six month periods ended June 2014 and June 2013, respectively, because these units are not considered to be contingent outstanding shares.

Note M – Fair Value Measurements

Financial assets and financial liabilities measured and reported at fair value are classified in a three level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.

•

Level 3 — Prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be VF’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.

The following table summarizes financial assets and financial liabilities that are measured and recorded in the consolidated financial statements at fair value on a recurring basis:


	Total		Fair Value Measurement Using ^(a)
In thousands	Fair Value		Level 1		Level 2		Level 3
June 2014
Financial assets:
Cash equivalents:
Money market funds	$	156,442	$	156,442	$	—	$	—
Time deposits		144,522		144,522		—		—
Derivative financial instruments		11,635		—		11,635		—
Investment securities		232,841		212,013		20,828		—
Other marketable securities		4,649		4,649		—		—
Financial liabilities:
Derivative financial instruments		40,798		—		40,798		—
Deferred compensation		293,042		—		293,042		—
December 2013
Financial assets:
Cash equivalents:
Money market funds	$	352,942	$	352,942	$	—	$	—
Time deposits		121,097		121,097		—		—
Derivative financial instruments		16,088		—		16,088		—
Investment securities		214,035		193,540		20,495		—
Other marketable securities		5,809		5,809		—		—
Financial liabilities:
Derivative financial instruments		46,791		—		46,791		—
Deferred compensation		274,659		—		274,659		—

^(a)	There were no transfers among the levels within the fair value hierarchy during the first half of 2014 or the year ended December 2013.

VF’s cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of forward foreign currency exchange contracts, is determined based on observable market inputs, including spot and forward exchange rates for foreign currencies, and considers the credit risk of the Company and its counterparties. Investment securities are held in VF’s deferred compensation plans as an economic hedge of the related deferred compensation liabilities. These investments are classified as trading securities and primarily include mutual funds (Level 1) that are valued based on quoted prices in active markets and a separately managed fixed income fund (Level 2) that is valued based on the net asset values of the underlying assets. Liabilities related to VF’s deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants’ selection of hypothetical investments. Other marketable securities consist of common stock investments classified as available-for-sale, the fair value of which is based on quoted prices in active markets.

All other financial assets and financial liabilities are recorded in the consolidated financial statements at cost, except life insurance contracts which are recorded at cash surrender value. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At June 2014 and December 2013, their carrying values approximated their fair values. Additionally, at June 2014 and December 2013, the carrying value of VF’s long-term debt, including the current portion, was $1,429.5 million and $1,432.0 million, respectively, compared with a fair value of $1,651.6 million and $1,568.4 million at those dates. Fair value for long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings.

Note N – Derivative Financial Instruments and Hedging Activities

Summary of Derivative Financial Instruments

All of VF’s outstanding derivative financial instruments are forward foreign currency exchange contracts. Although derivatives meet the criteria for hedge accounting at the inception of the hedging relationship, a limited number of derivative contracts intended to hedge assets and liabilities are not designated as hedges for accounting purposes. The notional amounts of outstanding derivative contracts were $1.9 billion at June 2014 and December 2013, and $2.1 billion at June 2013, consisting primarily of contracts hedging exposures to the euro, British pound, Canadian dollar, Mexican peso, Japanese yen and Polish zloty. Derivative contracts have maturities up to 24 months.

The following table presents outstanding derivatives on a gross basis by individual contract:


	Fair Value of Derivatives with						Fair Value of Derivatives with
	Unrealized Gains						Unrealized Losses
	June		December		June		June			December			June
In thousands	2014		2013		2013		2014			2013			2013
Foreign currency exchange contracts designated as hedging instruments	$	11,635	$	15,964	$	41,472	$	(40,191	)	$	(46,627	)	$	(10,629	)
Foreign currency exchange contracts dedesignated as hedging instruments		—		—		355		—			—			(133	)
Foreign currency exchange contracts not designated as hedging instruments		—		124		416		(607	)		(164	)		(91	)

Total derivatives	$	11,635	$	16,088	$	42,243	$	(40,798	)	$	(46,791	)	$	(10,853	)

VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject to master netting agreements. However, if VF were to offset and record the asset and liability balances of all of its forward foreign currency exchange contracts on a net basis in accordance with the terms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets as of June 2014, December 2013 and June 2013 would be adjusted from the current gross presentation to the net amounts as detailed in the following table:


	June 2014						December 2013						June 2013
	Derivative			Derivative			Derivative			Derivative			Derivative			Derivative
In thousands	Asset			Liability			Asset			Liability			Asset			Liability
Gross amounts presented in the Consolidated Balance Sheets	$	11,635		$	(40,798	)	$	16,088		$	(46,791	)	$	42,243		$	(10,853	)
Gross amounts not offset in the Consolidated Balance Sheets		(10,380	)		10,380			(11,641	)		11,641			(9,130	)		9,130

Net amounts	$	1,255		$	(30,418	)	$	4,447		$	(35,150	)	$	33,113		$	(1,723	)

Derivatives are classified as current or noncurrent based on their maturity dates, as follows:


	June			December			June
In thousands	2014			2013			2013
Other current assets	$	7,866		$	12,699		$	33,463
Accrued liabilities (current)		(34,289	)		(36,622	)		(8,685	)
Other assets (noncurrent)		3,769			3,389			8,780
Other liabilities (noncurrent)		(6,509	)		(10,169	)		(2,168	)

Cash Flow Hedges

VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs and intercompany royalties. The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized as follows:


In thousands	Gain (Loss) on Derivatives Recognized in OCI Three Months Ended June						Gain (Loss) on Derivatives Recognized in OCI Six Months Ended June
Cash Flow Hedging Relationships	2014			2013			2014			2013
Foreign currency exchange	$	(11,461	)	$	(3,093	)	$	(7,765	)	$	52,400

In thousands	Gain (Loss) Reclassified from Accumulated OCI into Income Three Months Ended June						Gain (Loss) Reclassified from Accumulated OCI into Income Six Months Ended June
Location of Gain (Loss)	2014			2013			2014			2013
Net sales	$	(1,542	)	$	1,378		$	118		$	1,223
Cost of goods sold		(4,339	)		3,683			(9,703	)		7,541
Other income (expense), net		(507	)		1,209			(1,215	)		2,301
Interest expense		(1,019	)		(972	)		(2,023	)		(1,929	)

Total	$	(7,407	)	$	5,298		$	(12,823	)	$	9,136

Derivative Contracts Dedesignated as Hedges

Cash flow hedges of some forecasted sales to third parties have historically been dedesignated as hedges when the sales were recognized. At that time, hedge accounting was discontinued and the amount of unrealized hedging gain or loss was recognized in net sales. These derivatives remained outstanding as an economic hedge of foreign currency exposures associated with the ultimate collection of the related accounts receivable, during which time changes in the fair value of the derivative contracts were recognized directly in earnings. As discussed below in Derivative Contracts Not Designated as Hedges, VF now utilizes separate derivative contracts to manage foreign currency risk related to the balance sheet exposures. Accordingly, 2013 was the last year during which dedesignations were recognized related to these cash flow hedges.

For the three and six month periods ended June 2013, VF recorded net gains of $0.8 million and $1.3 million, respectively, in other income (expense), net, for derivatives dedesignated as hedging instruments.

Derivative Contracts Not Designated as Hedges

VF uses derivative contracts to manage foreign currency exchange risk on intercompany loans as well as intercompany and third party accounts receivable and payable. These contracts are not designated as hedges, and are recorded at fair value in the Consolidated Balance Sheets. Changes in the fair values of these instruments are recognized directly in earnings. Gains or losses on these contracts largely offset the net remeasurement gains or losses on the related assets and liabilities. Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:

Gain (Loss) on Derivatives

Location of Gain (Loss)

Recognized in Income

In thousands

on Derivatives

Three Months Ended June

Six Months Ended June

Derivatives Not Designated as Hedges

Recognized in Income

2014

2013

2014

2013

Foreign currency exchange

Other income (expense), net

(4,014

)

2,729

(4,870

)

3,998

Other Derivative Information

There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three and six month periods ended June 2014 and June 2013.

At June 2014, accumulated OCI included $27.9 million of pretax net deferred losses for foreign exchange contracts that are expected to be reclassified to earnings during the next 12 months. The amounts ultimately reclassified to earnings will depend on exchange rates in effect when outstanding derivative contracts are settled.

VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedge the interest rate risk for issuance of long-term debt due in 2021 and 2033, respectively. In each case, the contracts were terminated concurrent with the issuance of the debt, and the realized gain or loss was deferred in accumulated OCI. The remaining pretax net deferred loss in accumulated OCI was $33.5 million at June 2014, which will be reclassified into interest expense in the Consolidated Statements of Income over the remaining terms of the associated debt instruments. Of the $33.5 million, approximately $4.2 million is expected to be reclassified to earnings during the next 12 months.

Note O – Recently Issued and Adopted Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued an update to their accounting guidance which requires unrecognized tax benefits to be netted with net operating loss or tax credit carryforwards in the balance sheet if specific criteria are met. This guidance became effective in the first quarter of 2014, but did not have an impact on VF’s consolidated financial statements.

In April 2014, the FASB changed the definition and disclosure requirements for discontinued operations. This guidance will be effective in the first quarter of 2015, but will not have an impact on VF’s consolidated financial statements unless the Company disposes of a business that meets the updated definition of discontinued operations.

In May 2014, the FASB issued a new accounting standard on revenue recognition which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The new model provides a 5-step analysis in determining the measurement of revenue and the timing of when it is recognized. New disclosures about revenues and cash flows arising from contracts with customers are also required. This guidance will be effective in the first quarter of 2017, and the Company is currently evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements.

In June 2014, the FASB issued an update to their accounting guidance related to stock-based compensation. The guidance requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. This guidance will be effective in the first quarter of 2016, but is not expected to have an impact on VF’s consolidated financial statements.

Note P – Subsequent Events

On July 15, 2014, VF’s Board of Directors declared a quarterly cash dividend of $0.2625 per share, payable on September 19, 2014 to stockholders of record on September 9, 2014.

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

All per share amounts are presented on a diluted basis. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.

Highlights of the Second Quarter of 2014

•

Revenues grew to $2.4 billion, an increase of 8% from the second quarter of 2013.

•

Outdoor & Action Sports revenues rose 16% over the 2013 quarter with double-digit percentage growth in every region and channel.

•

International revenues increased 14% over the 2013 quarter with double-digit percentage growth in Europe and Asia Pacific.

•

Direct-to-consumer revenues were up 18% and accounted for 26% of VF’s total revenues in the quarter.

•

Earnings per share increased 16% to $0.36 from $0.31 in the 2013 quarter.

Analysis of Results of Operations

Consolidated Statements of Income

The following table presents a summary of the changes in total revenues from the comparable periods in 2013:


In millions	Second Quarter		Six Months
Total revenues – 2013	$	2,220.4	$	4,832.3
Operations		177.9		340.9
Impact of foreign currency translation		3.8		9.7

Total revenues – 2014	$	2,402.1	$	5,182.9

VF reported revenue growth of 8% in the second quarter and 7% in the first six months of 2014 driven by growth in the Outdoor & Action Sports coalition, and continued strength in the international and direct-to-consumer businesses. Additional details on revenues are provided in the section titled “Information by Business Segment.”

VF’s foreign currency exposure primarily relates to business conducted in euro-based countries. In addition, VF conducts business in other developed and emerging markets around the world that creates exposure to foreign currencies other than the euro. The impact of foreign currency translation was not material to VF’s operating results for the second quarter and first six months of 2014.

The following table presents the percentage relationships to total revenues for components of the Consolidated Statements of Income:


	Second Quarter						Six Months
	2014			2013			2014			2013
Gross margin (total revenues less cost of goods sold)		48.4	%		48.5	%		48.9	%		48.3	%
Selling, general and administrative expenses		39.3	%		39.4	%		36.9	%		36.7	%

Operating income		9.2	%		9.1	%		12.0	%		11.6	%

Gross margin declined 10 basis points in the second quarter and increased 60 basis points during the first half of 2014 compared with the 2013 periods. The second quarter decline was primarily due to the negative impact of foreign currency and initiatives to manage inventories primarily in the Jeanswear coalition. Partially offsetting the gross margin decline in the second quarter and driving the increase in the first half of 2014 was the continued shift in our revenue mix towards higher margin businesses, including Outdoor and Action Sports, international and direct-to-consumer. In addition, a change in classification of retail concession fees positively impacted gross margin by approximately 30 basis points in both the second quarter and first half of 2014. The classification of retail concession fees is discussed below in the Direct-to-Consumer Operations section.

Selling, general and administrative expenses as a percentage of total revenues decreased 10 basis points in the second quarter and increased 20 basis points during the first six months of 2014 compared with the 2013 periods. In the second quarter and first six months of 2014, the positive impact from leverage of operating expenses on higher revenues was partially offset by increased investments in direct-to-consumer businesses and marketing, resulting in net decreases in the percentage of selling, general and administrative expenses to revenues of 40 and 10 basis points, respectively, compared with the 2013 periods. In addition, the second quarter and first six months of 2014 were both negatively impacted by approximately 30 basis points due to the aforementioned change in classification of retail concession fees.

Net interest expense decreased by $0.9 million in the second quarter and $2.1 million in the first six months of 2014 from the comparable periods in 2013, due to the repayment of $400 million of floating rate notes during the third quarter of 2013, and increased interest income on cash equivalents. Total outstanding debt averaged $1.7 billion for the first half of 2014 and $1.9 billion for the same period in 2013. The weighted average interest rates on total outstanding debt were 4.9% and 4.5% for the first six months of 2014 and 2013, respectively.

Net income for the second quarter of 2014 increased to $157.7 million ($0.36 per share) compared with $138.3 million ($0.31 per share) in 2013. Net income for the first half of 2014 increased to $454.9 million ($1.03 per share) compared with $408.7 million ($0.91 per share) in 2013. The increases in earnings per share for the second quarter and first half of 2014 compared with the 2013 periods resulted primarily from improved operating performance, as discussed in the “Information by Business Segment” section below, as well as the other factors described above.

Information by Business Segment

VF’s businesses are grouped into product categories, and by brands within those product categories, for management and internal financial reporting purposes. These groupings of businesses within VF are referred to as “coalitions.” These coalitions are the basis for VF’s reportable business segments.

See Note K to the Consolidated Financial Statements for a summary of results of operations by coalition, along with a reconciliation of coalition profit to income before income taxes.

The following tables present a summary of the changes in coalition revenues and coalition profit for the second quarter and first six months of 2014 from the comparable periods in 2013:

Coalition revenues:


	Second Quarter
	Outdoor &										Contemporary
In millions	Action Sports		Jeanswear			Imagewear			Sportswear		Brands			Other			Total
Coalition revenues – 2013	$	1,103.6	$	611.7		$	241.8		$	133.5	$	98.6		$	31.2		$	2,220.4
Operations		162.0		3.8			9.2			6.6		(3.4	)		(0.3	)		177.9
Impact of foreign currency translation		13.5		(9.7	)		(1.0	)		—		1.0			—			3.8

Coalition revenues – 2014	$	1,279.1	$	605.8		$	250.0		$	140.1	$	96.2		$	30.9		$	2,402.1


	Six Months
	Outdoor &										Contemporary
In millions	Action Sports		Jeanswear			Imagewear			Sportswear		Brands			Other			Total
Coalition revenues – 2013	$	2,487.9	$	1,329.7		$	494.6		$	261.7	$	202.3		$	56.1		$	4,832.3
Operations		338.8		(16.5	)		20.9			9.9		(9.8	)		(2.4	)		340.9
Impact of foreign currency translation		27.1		(17.0	)		(2.3	)		—		1.9			—			9.7

Coalition revenues – 2014	$	2,853.8	$	1,296.2		$	513.2		$	271.6	$	194.4		$	53.7		$	5,182.9

Coalition profit:


	Second Quarter
	Outdoor &												Contemporary
In millions	Action Sports			Jeanswear			Imagewear			Sportswear			Brands			Other			Total
Coalition profit – 2013	$	100.5		$	108.9		$	35.1		$	16.3		$	7.9		$	0.4		$	269.1
Operations		30.3			(8.3	)		0.5			(6.0	)		0.8			(0.4	)		16.9
Impact of foreign currency translation		(0.1	)		(0.5	)		(0.3	)		—			0.1			—			(0.8	)

Coalition profit – 2014	$	130.7		$	100.1		$	35.3		$	10.3		$	8.8		$	—		$	285.2


	Six Months
	Outdoor &												Contemporary
In millions	Action Sports			Jeanswear			Imagewear			Sportswear			Brands			Other			Total
Coalition profit (loss) – 2013	$	327.0		$	252.2		$	66.6		$	28.5		$	20.5		$	(2.2	)	$	692.6
Operations		74.8			(23.3	)		7.0			(5.7	)		(4.0	)		(1.0	)		47.8
Impact of foreign currency translation		3.4			0.5			(0.5	)		—			0.2			—			3.6

Coalition profit (loss) – 2014	$	405.2		$	229.4		$	73.1		$	22.8		$	16.7		$	(3.2	)	$	744.0

The following section discusses the changes in revenues and profitability by coalition:

Outdoor & Action Sports:


	Second Quarter						Percent Change			Six Months						Percent Change
Dollars in millions	2014			2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	1,279.1		$	1,103.6			15.9	%	$	2,853.8		$	2,487.9			14.7	%
Coalition profit		130.7			100.5			30.1	%		405.2			327.0			23.9	%
Operating margin		10.2	%		9.1	%					14.2	%		13.1	%

Coalition revenues for Outdoor & Action Sports increased 16% in the second quarter of 2014 compared with 2013 primarily due to growth in The North Face^®, Vans^® and Timberland^® brands, which achieved global revenue growth of 11%, 21% and 19%, respectively. U.S. revenues in the second quarter increased 13% and international revenues rose 19%, reflecting double-digit percentage growth in Europe and Asia Pacific.

Coalition revenues for Outdoor & Action Sports increased 15% in the first six months of 2014 compared with the 2013 period primarily due to growth in The North Face^®, Vans^® and Timberland^® brands, which grew 13%, 20% and 14%, respectively. U.S. revenues in the first six months increased 14% and international revenues rose 16%, reflecting double-digit percentage growth in both Europe and Asia Pacific.

Global revenue increases in the second quarter and first six months of 2014 were driven by growth in both the direct-to-consumer and wholesale businesses. Direct-to-consumer revenues for Outdoor & Action Sports increased 24% and 21% in the second quarter and first six months of 2014, respectively. New store openings, comparable store growth and an expanding e-commerce business all contributed to the direct-to-consumer revenue growth. Wholesale revenues increased 13% and 12% in the second quarter and first six months of 2014, respectively, driven primarily by growth in The North Face^®, Vans^® and Timberland^® brands.

Operating margin for the second quarter and first six months of 2014 improved 110 basis points compared with the 2013 periods driven by a shift in business mix towards higher margin businesses and the leverage of operating expenses on higher revenues, partially offset by increased investments in direct-to-consumer businesses and marketing.

Jeanswear:


	Second Quarter						Percent Change			Six Months						Percent Change
Dollars in millions	2014			2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	605.8		$	611.7			(1.0	%)	$	1,296.2		$	1,329.7			(2.5	%)
Coalition profit		100.1			108.9			(8.0	%)		229.4			252.2			(9.0	%)
Operating margin		16.5	%		17.8	%					17.7	%		19.0	%

Global Jeanswear revenues decreased 1% and 3% in the second quarter and first six months of 2014, respectively, compared with the 2013 periods. Revenues in the Americas region declined 3% and 6% in the second quarter and first six months of 2014, respectively. These declines were due to unfavorable women’s denim trends and ongoing pressure in the U.S. mid-tier and department store channels, resulting in Lee^® brand revenues in the Americas region declining by a mid-teen and low double-digit percentage rate in the second quarter and first six months of 2014, respectively, compared with the 2013 periods. Wrangler^® brand revenues in the Americas region increased 4% in the second quarter of 2014 and were flat in the first six months of 2014 compared with the 2013 periods. Partially offsetting the revenue decreases in the Americas region for the second quarter and first six months of 2014 were increases in Europe of 15% and 11%, respectively, driven by wholesale growth in the Lee^® and Wrangler^® brands, and increases in the Asia Pacific region of 3% and 7%, respectively, primarily due to wholesale growth in the Lee^® brand.

Operating margin for the second quarter and first six months of 2014 decreased 130 basis points compared with the 2013 periods primarily due to the impact of factory downtime and initiatives to liquidate excess inventory in North America, partially offset by improved profitability in our international businesses.

Imagewear:


	Second Quarter						Percent Change			Six Months						Percent Change
Dollars in millions	2014			2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	250.0		$	241.8			3.4	%	$	513.2		$	494.6			3.8	%
Coalition profit		35.3			35.1			0.7	%		73.1			66.6			9.7	%
Operating margin		14.1	%		14.5	%					14.2	%		13.5	%

Imagewear revenues increased 3% and 4% during the second quarter and first six months of 2014, respectively, compared with the 2013 periods. The Image business grew 5% and 4% in the second quarter and first six months of 2014, respectively, led by its industrial and government sectors. In addition, revenues for the Licensed Sports business increased 1% and 4% in the second quarter and first six months of 2014, respectively, reflecting strong growth in National Football League sales. Effective in the first quarter of 2014, management strategically transitioned the youth business for Major League Baseball to a licensed model, which negatively impacted revenues by 2% and 3% in the second quarter and first six months of 2014, respectively.

Operating margin decreased 40 basis points during the second quarter of 2014 compared with the 2013 period primarily due to the impact of unfavorable mix in both the Image and Licensed Sports businesses. Operating margin increased 70 basis points during the first six months of 2014 primarily driven by favorable mix in the Licensed Sports business in the first quarter of 2014. In addition, operating margin in both the second quarter and first half of 2014 was positively impacted by the leverage of operating expenses on higher revenues compared with the 2013 periods.

Sportswear:


	Second Quarter						Percent Change			Six Months						Percent Change
Dollars in millions	2014			2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	140.1		$	133.5			5.0	%	$	271.6		$	261.7			3.8	%
Coalition profit		10.3			16.3			(36.9	%)		22.8			28.5			(19.9	%)
Operating margin		7.3	%		12.2	%					8.4	%		10.9	%

Sportswear revenues increased 5% and 4% in the second quarter and first six months of 2014, respectively, compared with the 2013 periods. Both 2014 periods were driven by an 18% increase in Kipling^® brand revenues in North America, reflecting growth in direct-to-consumer and wholesale revenues. Nautica^® brand revenues increased 2% and 1% during the second quarter and first six months of 2014, respectively, as growth in the direct-to-consumer business was partially offset by declines in wholesale revenues due to challenges in the U.S. department store channel.

Operating margin declined 490 and 250 basis points in the second quarter and first six months of 2014, respectively, compared with the 2013 periods. The decreases for both periods were primarily driven by a decline in gross margin in the second quarter of 2014 due to higher levels of promotional activity in the wholesale channel, and increased investments in infrastructure and direct-to-consumer businesses, partially offset by a shift in business mix towards higher margin businesses.

Contemporary Brands:


	Second Quarter						Percent Change			Six Months						Percent Change
Dollars in millions	2014			2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	96.2		$	98.6			(2.5	%)	$	194.4		$	202.3			(3.9	%)
Coalition profit		8.8			7.9			12.2	%		16.7			20.5			(18.1	%)
Operating margin		9.2	%		8.0	%					8.6	%		10.1	%

Revenues for Contemporary Brands decreased 2% and 4% in the second quarter and first six months of 2014, respectively, compared with the 2013 periods, due to ongoing challenges in the women’s premium denim market. Wholesale revenues decreased 9% and 11% during the second quarter and first half of 2014, respectively, and were partially offset by increases in direct-to-consumer revenues of 10% and 11% for the respective periods. Effective in the first quarter of 2014, management strategically transitioned a portion of the youth business to a licensed model, which negatively impacted revenues by 3% in the second quarter and first six months of 2014.

Operating margin increased 120 basis points in the second quarter of 2014 compared with the 2013 period primarily due to the favorable resolution of a customs duty matter and a shift in business mix towards higher margin businesses, partially offset by higher selling, general and administrative costs as a percentage of revenues resulting from the overall sales decline and increased investments in direct-to-consumer businesses. Operating margin declined 150 basis points for the first six months of 2014 compared with the 2013 period primarily due to higher selling, general and administrative costs as a percentage of revenues resulting from the sales decline and increased investments in direct-to-consumer businesses.

Other:


	Second Quarter					Percent Change			Six Months						Percent Change
Dollars in millions	2014		2013			Percent Change			2014			2013			Percent Change
Coalition revenues	$	30.9	$	31.2			(0.9	%)	$	53.7		$	56.1			(4.2	%)
Coalition profit (loss)		—		0.4						(3.2	)		(2.2	)
Operating margin		—		1.3	%					(5.9	%)		(3.9	%)

VF Outlet^® stores in the U.S. sell VF-branded products at prices that are generally higher than what could be realized through distressed channels, as well as other non-VF products. Revenues and profits of VF products sold in these stores are reported as part of the operating results of the applicable coalition, while revenues and profits of non-VF products are reported in this “other” category.

Reconciliation of Coalition Profit to Income Before Income Taxes:

There are two types of costs necessary to reconcile total coalition profit, as discussed in the preceding paragraphs, to consolidated income before income taxes. These costs are (i) corporate and other expenses, discussed below, and (ii) interest expense, net, which was discussed in the previous “Consolidated Statements of Income” section.


	Second Quarter				Percent Change			Six Months				Percent Change
Dollars in millions	2014		2013		Percent Change			2014		2013		Percent Change
Corporate and other expenses	$	65.9	$	69.2		(4.9	%)	$	123.6	$	134.0		(7.8	%)
Interest expense, net		19.8		20.7		(4.3	%)		39.1		41.2		(5.1	%)

Corporate and other expenses are those that have not been allocated to the coalitions for internal management reporting, including (i) information systems and shared services, (ii) corporate headquarters’ costs and (iii) other income and expenses. Other income and expenses includes costs of corporate programs and initiatives; costs of registering, maintaining and enforcing certain VF trademarks; and miscellaneous costs, the most significant of which is related to the expense of VF’s centrally-managed U.S. defined benefit pension plans. The current year service cost component of pension cost is allocated to the coalitions, while the remaining cost components, totaling $8.0 million and $16.0 million for the second quarter and first half of 2014, respectively, and $15.2 million and $30.4 million for the second quarter and first half of 2013, respectively, are reported in corporate and other expenses.

International Operations

International revenues grew 14% in the second quarter and 12% in the first six months of 2014. Revenues in Europe rose 16% in the second quarter and 13% in the first six months of 2014 with positive results from nearly every VF brand sold in that region. In the Asia Pacific region, revenues increased 17% in the second quarter and 16% in the first six months of 2014 primarily driven by growth in China and Korea. Revenues in the Americas (non-U.S.) region increased 6% and 3% during the second quarter and first six months of 2014, respectively. International revenues were 36% and 34% of total VF sales in the second quarter of 2014 and 2013, respectively, and 40% and 38% of total VF sales in the first six months of 2014 and 2013, respectively.

Direct-to-Consumer Operations

Direct-to-consumer revenues grew 18% in the second quarter and 17% in the first six months of 2014 with double-digit increases in all regions and growth in nearly every VF brand. New store openings, comparable store growth and an expanding e-commerce business all contributed to the direct-to-consumer revenue growth. VF opened 41 stores in the second quarter and 64 stores in the first six months of 2014, bringing the total number of VF-owned retail stores to 1,299 at June 2014. Direct-to-consumer revenues reached 26% of total revenues in the second quarter of 2014 compared with 23% (22% prior to the concession classification change discussed below) in the 2013 period. Direct-to-consumer revenues were 24% of total revenues in the first six months of 2014 compared with 22% (21% prior to the concession classification change) in the 2013 period.

Concessions are retail store locations, which are all outside the U.S., where VF is responsible for all aspects of operations without ownership of the retail space. Under typical concession arrangements, VF pays a concession fee for use of the space based on a percentage of retail sales. Beginning in 2014, we have included all concessions-based arrangements in our direct-to-consumer channel. In addition, we began classifying all concession fees as a component of selling, general and administrative expenses instead of the previous treatment as an offset to revenue in the Consolidated Statement of Income. We made these changes to better represent the operations of our direct-to-consumer business. These changes in classification did not impact operating income, and 2013 reported balances have not been restated in the Consolidated Statement of Income because the impact is immaterial. However, comparative references to direct-to-consumer and wholesale revenue growth rates reflect the reclassification of concession revenues to the direct-to-consumer channel as if the change had occurred at the beginning of each reporting period.

Analysis of Financial Condition

Balance Sheets

The following discussion refers to significant changes in balances at June 2014 compared with December 2013:

•

Decrease in accounts receivable—due to the seasonality of the business.

•

Increase in inventories—due to the seasonality of the business and anticipated sales growth in the second half of 2014.

•

Increase in other current assets—primarily due to higher prepaid income taxes.

•

Increase in short-term borrowings—due to commercial paper borrowings used to support seasonal working capital requirements and share repurchases in the first half of 2014.

•

Decrease in accounts payable—driven by the timing of inventory purchases and payments to vendors.

•

Decrease in accrued liabilities—primarily due to timing of accruals and payments related to compensation and accrued income taxes.

The following discussion refers to significant changes in balances at June 2014 compared with June 2013:

•

Increase in accounts receivable—resulting from an increase in wholesale revenues for the second quarter of 2014.

•

Increase in inventories—due to anticipated sales growth in the second half of 2014 and the impact of foreign currency translation.

•

Increase in other current assets— primarily due to higher prepaid income taxes.

•

Increase in other assets—driven by increases in assets held for deferred compensation plans and deferred software costs primarily related to i) system implementations and ii) a new software license agreement that supports our e-commerce infrastructure and other key business functions.

•

Increase in short-term borrowings—due to commercial paper borrowings used to support seasonal working capital requirements and higher levels of share repurchases.

•

Decrease in current portion of long-term debt—related to the third quarter of 2013 repayment of the $400 million two-year notes issued to finance the acquisition of Timberland.

•

Increase in accrued liabilities—primarily due to an increase in unrealized hedging losses and timing of accruals and payments related to compensation, marketing and accrued income taxes.

Liquidity and Cash Flows

The financial condition of VF is reflected in the following:


	June			December			June
Dollars in millions	2014			2013			2013
Working capital	$	1,909.6		$	2,315.0		$	1,653.4
Current ratio		2.0 to 1			2.5 to 1			2.0 to 1
Debt to total capital ratio		26.2	%		19.3	%		26.6	%

For the ratio of debt to total capital, debt is defined as short-term and long-term borrowings, and total capital is defined as debt plus stockholders’ equity. The ratio of net debt to total net capital (with net debt defined as debt less cash and equivalents and total net capital defined as total capital less cash and equivalents) was 21.4% at June 2014, 10.0% at December 2013 and 23.1% at June 2013.

In summary, our cash flows were as follows:


	Six Months
In thousands	2014			2013
Net cash provided by operating activities	$	219,587		$	291,413
Net cash used by investing activities		(163,587	)		(188,476	)
Net cash used by financing activities		(352,015	)		(375,678	)

Cash Provided by Operating Activities

VF’s primary source of liquidity is the strong cash flow provided by operating activities, which is dependent on the level of net income and changes in working capital. Cash provided by operating activities for the first six months of 2014 decreased to $219.6 million from $291.4 million for the 2013 period. The decline is due to an increase in net cash usage from working capital changes, partially offset by an increase in net income and a $100.0 million discretionary defined benefit plan contribution in the first quarter of 2013 that did not recur in 2014.

Cash Used by Investing Activities

Cash used by investing activities for the first six months of 2014 decreased to $163.6 million from $188.5 million in 2013. VF’s investing activities in the first six months of 2014 related primarily to capital expenditures of $95.8 million and software purchases of $56.0 million. Capital expenditures decreased $59.6 million compared with the 2013 period due to the completion of a number of significant projects during 2013. Software purchases increased $27.3 million over the 2013 period due to system implementations and a new software license agreement that supports our e-commerce infrastructure and other key business functions.

Cash Used by Financing Activities

Cash used by financing activities in the first six months of 2014 was $352.0 million compared with $375.7 million in the first six months of 2013. The decline was primarily due to an increase in short-term borrowings, partially offset by higher levels of share repurchases and cash dividends paid.

During the first six months of 2014, VF repurchased 12.0 million shares of its Common Stock in open market transactions at a total cost of $727.5 million (average price per share of $60.46). During the first six months of 2013, VF repurchased 6.8 million shares of its Common Stock in open market transactions at a total cost of $281.0 million (average price per share of $41.16). As of the end of the second quarter of 2014, the Company had 40.7 million shares remaining under its current share repurchase program authorized by VF’s Board of Directors. VF will continue to evaluate future share repurchases considering funding required for business acquisitions, VF’s Common Stock price and levels of stock option exercises.

VF relies on continued strong cash generation to finance its ongoing operations. In addition, VF has significant liquidity from its available cash balances and credit facilities. VF maintains a $1.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”), which supports its $1.25 billion U.S. commercial paper program for short-term seasonal working capital requirements and corporate operations. The Global Credit Facility expires in December 2016. Commercial paper borrowings and standby letters of credit issued as of June 2014 were $550.0 million and $16.7 million, respectively, leaving $683.3 million available for borrowing against this facility at June 2014.

VF’s favorable credit agency ratings allow for access to additional liquidity at competitive rates. At the end of June 2014, VF’s long-term debt ratings were ‘A’ by Standard & Poor’s Ratings Services and ‘A3’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ‘A-1’ and ‘Prime-2’, respectively.

None of VF’s long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF and, as a result of the change in control, the 2017, 2021 and 2037 notes were rated below investment grade by recognized rating agencies, VF would be obligated to repurchase the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest.

Management’s Discussion and Analysis in the 2013 Form 10-K provided a table summarizing VF’s contractual obligations and commercial commitments at the end of 2013 that would require the use of funds. Since the filing of the 2013 Form 10-K, there have been no material changes in the disclosed amounts, except as noted below:

•

Inventory purchase obligations increased by approximately $408.2 million at the end of June 2014 due to the seasonality of VF’s businesses.

Management believes that VF’s cash balances and funds provided by operating activities, as well as its Global Credit Facility, additional borrowing capacity and access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of its current and long-term obligations when due, (ii) adequate liquidity to fund capital expenditures and to maintain the dividend to stockholders at current and expected rates and (iii) flexibility to meet investment opportunities that may arise.

Recently Issued and Adopted Accounting Standards

In July 2013, the FASB issued an update to their accounting guidance which requires unrecognized tax benefits to be netted with net operating loss or tax credit carryforwards in the balance sheet if specific criteria are met. This guidance became effective in the first quarter of 2014, but did not have an impact on VF’s consolidated financial statements.

Critical Accounting Policies and Estimates

Management has chosen accounting policies that it considers to be appropriate to accurately and fairly report VF’s operating results and financial position in conformity with generally accepted accounting principles in the United States. Our critical accounting policies are applied in a consistent manner. Significant accounting policies are summarized in Note A to the Consolidated Financial Statements included in the 2013 Form 10-K.

The application of these accounting policies requires management to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, contingent assets and liabilities, and related disclosures. These estimates, assumptions and judgments are based on historical experience, current trends and other factors believed to be reasonable under the circumstances. Management evaluates these estimates and assumptions and may retain outside consultants to assist in the evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis in the 2013 Form 10-K. There have been no material changes in these policies.

Cautionary Statement on Forward-Looking Statements

From time to time, VF may make oral or written statements, including statements in this quarterly report that constitute “forward-looking statements” within the meaning of the federal securities laws. These include statements concerning plans, objectives, projections and expectations relating to VF’s operations or economic performance, and assumptions related thereto. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. Forward-looking statements are not guarantees and 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 quarterly report on Form 10-Q include, but are not limited to, the overall level of consumer demand for apparel; fluctuations in the price, availability and quality of raw materials and contracted products; disruption to VF’s distribution system; disruption and volatility in the global capital and credit markets; VF’s reliance on a small number of large customers; the financial strength of VF’s customers; VF’s response to changing fashion trends; increasing pressure on margins; VF’s ability to implement its growth strategy; VF’s ability to grow its international and direct-to-consumer businesses; VF and its customers’ ability to maintain the strength and security of its information technology systems; adverse unseasonable weather conditions; 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; foreign currency fluctuations; changes in tax liabilities; 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.

Item 3 — Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes in VF’s market risk exposures from what was disclosed in Item 7A in the 2013 Form 10-K.

Item 4 — Controls and Procedures

Disclosure controls and procedures:

Under the supervision of the Chief Executive Officer and Chief Financial Officer, a Disclosure Committee comprising various members of management has evaluated the effectiveness of the disclosure controls and procedures at VF and its subsidiaries as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of the Evaluation Date that such controls and procedures were effective.

Changes in internal control over financial reporting:

There have been no changes during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, VF’s internal control over financial reporting.

Part II — Other Information

Item 1 — Legal Proceedings

Information on VF’s legal proceedings is set forth under Part I, Item 3, “Legal Proceedings,” in the 2013 Form 10-K. There have been no material changes to the legal proceedings from those described in the 2013 Form 10-K.

Item 1A — Risk Factors

You should carefully consider the risk factors set forth under Part I, Item 1A, “Risk Factors,” in the 2013 Form 10-K. There have been no material changes to the risk factors from those disclosed in the 2013 Form 10-K.

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

Total Number of

Maximum Number

Total

Weighted

Shares Purchased

of Shares that May

Number of

Average

as Part of Publicly

Yet be Purchased

Shares

Price Paid

Announced

Under the

Second Quarter 2014

Purchased⁽¹⁾

per Share

Programs ⁽¹⁾

Program

March 30 – April 26, 2014

2,868,299

60.23

2,868,299

40,731,276

April 27 – May 24, 2014

—

40,731,276

May 25 – June 28, 2014

2,500

61.91

2,500

40,728,776

Total

2,870,799

⁽¹⁾

Includes 2,500 shares of Common Stock that were purchased during the quarter in connection with VF’s deferred compensation plans. VF will continue to evaluate future share repurchases—considering funding required for business acquisitions, VF’s Common Stock price and levels of stock option exercises.

Item 6 — Exhibits


31.1		Certification of Eric C. Wiseman, President and Chief Executive Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Robert K. Shearer, Senior Vice President and Chief Financial Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Eric C. Wiseman, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Robert K. Shearer, Senior Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.