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V F CORP - Quarter Report: 2015 April (Form 10-Q)

10-Q
Table of Contents

 

 

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 April 4, 2015

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):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

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 May 2, 2015, there were 424,975,214 shares of the registrant’s common stock outstanding.

 

 

 


Table of Contents

VF CORPORATION

Table of Contents

 

     Page
No.
 

Part I — Financial Information

  

Item 1 — Financial Statements (Unaudited)

     3   

Consolidated Balance Sheets: March 2015, December 2014 and March 2014

     3   

Consolidated Statements of Income: Three months ended March 2015 and March 2014

     4   

Consolidated Statements of Comprehensive Income: Three months ended March 2015 and March 2014

     5   

Consolidated Statements of Cash Flows: Three months ended March 2015 and March 2014

     6   

Consolidated Statements of Stockholders’ Equity: Year ended December 2014 and three months ended March 2015

     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

     27   

Item 4 — Controls and Procedures

     27   

Part II — Other Information

  

Item 1 — Legal Proceedings

     27   

Item 1A — Risk Factors

     27   

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

     27   

Item 6 — Exhibits

     28   

Signatures

     29   


Table of Contents

Part I — Financial Information

Item 1 — Financial Statements (Unaudited)

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts)

 

     March
2015
    December
2014
    March
2014
 

ASSETS

      

Current assets

      

Cash and equivalents

   $ 655,483      $ 971,895      $ 321,672   

Accounts receivable, less allowance for doubtful accounts of:

      

March 2015 – $25,698; December 2014 – $26,694;

      

March 2014 – $ 46,173

     1,283,216        1,276,224        1,310,468   

Inventories

     1,624,234        1,482,804        1,512,459   

Other current assets

     518,593        454,931        389,922   
  

 

 

   

 

 

   

 

 

 

Total current assets

  4,081,526      4,185,854      3,534,521   

Property, plant and equipment

  911,478      942,181      921,970   

Intangible assets

  2,291,505      2,433,552      2,946,959   

Goodwill

  1,795,359      1,824,956      2,022,086   

Other assets

  652,996      593,597      559,616   
  

 

 

   

 

 

   

 

 

 

Total assets

$ 9,732,864    $ 9,980,140    $ 9,985,152   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Short-term borrowings

$ 1,067,961    $ 21,822    $ 261,105   

Current portion of long-term debt

  3,384      3,975      5,142   

Accounts payable

  457,744      690,842      467,578   

Accrued liabilities

  749,237      903,602      807,708   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

  2,278,326      1,620,241      1,541,533   

Long-term debt

  1,422,840      1,423,581      1,425,833   

Other liabilities

  1,127,433      1,305,436      1,262,957   

Commitments and contingencies

Stockholders’ equity

Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding at March 2015, December 2014 or March 2014

  —        —        —     

Common Stock, stated value $0.25; shares authorized, 1,200,000,000; shares outstanding at March 2015 – 424,964,672; December 2014 – 432,859,891; March 2014 – 433,166,874

  106,241      108,215      108,292   

Additional paid-in capital

  3,076,647      2,993,186      2,826,429   

Accumulated other comprehensive income (loss)

  (902,392   (702,272   (209,489

Retained earnings

  2,623,769      3,231,753      3,029,597   
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

  4,904,265      5,630,882      5,754,829   
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

$ 9,732,864    $ 9,980,140    $ 9,985,152   
  

 

 

   

 

 

   

 

 

 

See notes to consolidated financial statements.

 

3


Table of Contents

VF CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended March  
     2015     2014  

Net sales

   $ 2,803,302      $ 2,750,115   

Royalty income

     33,999        30,663   
  

 

 

   

 

 

 

Total revenues

  2,837,301      2,780,778   
  

 

 

   

 

 

 

Costs and operating expenses

Cost of goods sold

  1,446,547      1,406,566   

Selling, general and administrative expenses

  992,919      971,022   
  

 

 

   

 

 

 
  2,439,466      2,377,588   
  

 

 

   

 

 

 

Operating income

  397,835      403,190   

Interest income

  2,098      1,331   

Interest expense

  (21,849   (20,637

Other income (expense), net

  828      (2,092
  

 

 

   

 

 

 

Income before income taxes

  378,912      381,792   

Income taxes

  90,203      84,599   
  

 

 

   

 

 

 

Net income

$ 288,709    $ 297,193   
  

 

 

   

 

 

 

Earnings per common share

Basic

$ 0.68    $ 0.68   

Diluted

  0.67      0.67   

Cash dividends per common share

$ 0.3200    $ 0.2625   

See notes to consolidated financial statements.

 

4


Table of Contents

VF CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

 

     Three Months Ended March  
     2015     2014  

Net income

   $ 288,709      $ 297,193   
  

 

 

   

 

 

 

Other comprehensive income (loss)

Foreign currency translation

Gains (losses) arising during the period

  (247,555   (10,902

Less income tax effect

  1,474      1,315   

Defined benefit pension plans

Amortization of net deferred actuarial losses

  15,497      9,384   

Amortization of deferred prior service costs

  762      1,362   

Less income tax effect

  (6,966   (4,125

Derivative financial instruments

Gains (losses) arising during the period

  68,010      3,696   

Less income tax effect

  (26,728   (1,453

Reclassification to net income for (gains) losses realized

  (8,095   5,416   

Less income tax effect

  3,181      (2,128

Marketable securities

Gains (losses) arising during the period

  495      (549

Less income tax effect

  (195   215   
  

 

 

   

 

 

 

Other comprehensive income (loss)

  (200,120   2,231   
  

 

 

   

 

 

 

Comprehensive income

$ 88,589    $ 299,424   
  

 

 

   

 

 

 

See notes to consolidated financial statements.

 

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Table of Contents

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Three Months Ended March  
     2015     2014  

Operating activities

    

Net income

   $ 288,709      $ 297,193   

Adjustments to reconcile net income to cash (used) provided by operating activities:

    

Depreciation and amortization

     65,880        64,017   

Stock-based compensation

     25,946        26,956   

Provision for doubtful accounts

     2,345        3,412   

Pension expense (less than) in excess of contributions

     (239,700     5,923   

Other, net

     (6,405     26,505   

Changes in operating assets and liabilities:

    

Accounts receivable

     (48,886     41,688   

Inventories

     (165,494     (117,718

Accounts payable

     (225,966     (170,171

Income taxes

     (13,801     (50,996

Accrued liabilities

     (71,668     (73,355

Other assets and liabilities

     (41,584     (39,800
  

 

 

   

 

 

 

Cash (used) provided by operating activities

  (430,624   13,654   

Investing activities

Capital expenditures

  (33,028   (49,309

Software purchases

  (36,708   (44,654

Other, net

  10,617      (5,170
  

 

 

   

 

 

 

Cash used by investing activities

  (59,119   (99,133

Financing activities

Net increase in short-term borrowings

  1,047,660      242,586   

Payments on long-term debt

  (1,414   (1,099

Purchases of treasury stock

  (730,811   (513,778

Cash dividends paid

  (135,912   (114,776

Proceeds from issuance of Common Stock, net of shares withheld for taxes

  (4,107   (10,966

Tax benefits of stock-based compensation

  29,678      31,773   
  

 

 

   

 

 

 

Cash provided (used) by financing activities

  205,094      (366,260

Effect of foreign currency rate changes on cash and equivalents

  (31,763   (2,992
  

 

 

   

 

 

 

Net change in cash and equivalents

  (316,412   (454,731

Cash and equivalents — beginning of year

  971,895      776,403   
  

 

 

   

 

 

 

Cash and equivalents — end of period

$ 655,483    $ 321,672   
  

 

 

   

 

 

 

See notes to consolidated financial statements.

 

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VF CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

 

     Common Stock            Accumulated        
       Additional      Other        
       Paid-in      Comprehensive     Retained  
     Shares     Amounts     Capital      Income (Loss)     Earnings  

Balance, December 2013

     440,310,370      $ 110,078      $ 2,746,590       $ (211,720   $ 3,432,090   

Net income

     —          —          —           —          1,047,505   

Dividends on Common Stock

     —          —          —           —          (478,933

Purchase of treasury stock

     (12,037,000     (3,009     —           —          (724,786

Stock-based compensation, net

     4,586,521        1,146        246,596         —          (44,123

Foreign currency translation

     —          —          —           (463,588     —     

Defined benefit pension plans

     —          —          —           (99,683     —     

Derivative financial instruments

     —          —          —           73,143        —     

Marketable securities

     —          —          —           (424     —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance, December 2014

  432,859,891      108,215      2,993,186      (702,272   3,231,753   

Net income

  —        —        —        —        288,709   

Dividends on Common Stock

  —        —        —        —        (135,912

Purchase of treasury stock

  (10,009,800   (2,502   —        —        (728,309

Stock-based compensation, net

  2,114,581      528      83,461      —        (32,472

Foreign currency translation

  —        —        —        (246,081   —     

Defined benefit pension plans

  —        —        —        9,293      —     

Derivative financial instruments

  —        —        —        36,368      —     

Marketable securities

  —        —        —        300      —     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance, March 2015

  424,964,672    $ 106,241    $ 3,076,647    $ (902,392 $ 2,623,769   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

See notes to consolidated financial statements.

 

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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 March 2015, December 2014 and March 2014 relate to the fiscal periods ended on April 4, 2015, January 3, 2015 and March 29, 2014, 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 2014 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 months ended March 2015 are not necessarily indicative of results that may be expected for any other interim period or for the year ending January 2, 2016. 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 2014 (“2014 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 VF’s accounts receivable may be sold to the financial institution and remain outstanding at any point in time. VF removes the accounts receivable from the Consolidated Balance Sheets at the time of sale. VF does not retain any interests in the sold accounts receivable but continues to service and collect outstanding accounts receivable on behalf of the financial institution. During the first quarter of 2015, VF sold total accounts receivable of $321.9 million. As of March 2015, December 2014 and March 2014, $168.4 million, $130.3 million and $167.7 million, respectively, of sold accounts receivable had been removed from the Consolidated Balance Sheets but remained outstanding with the financial institution. The funding fee charged by the financial institution is included in other income (expense), net, and was $0.4 million for both the first quarter of 2015 and 2014. Net proceeds of this program are classified in operating activities in the Consolidated Statements of Cash Flows.

Note C – Inventories

 

In thousands    March
2015
     December
2014
     March
2014
 

Finished products

   $ 1,366,759       $ 1,232,623       $ 1,279,167   

Work in process

     103,125         104,517         92,155   

Raw materials

     154,350         145,664         141,137   
  

 

 

    

 

 

    

 

 

 

Total inventories

$ 1,624,234    $ 1,482,804    $ 1,512,459   
  

 

 

    

 

 

    

 

 

 

Note D – Property, Plant and Equipment

 

In thousands    March
2015
     December
2014
     March
2014
 

Land and improvements

   $ 56,791       $ 57,151       $ 56,895   

Buildings and improvements

     978,845         986,679         969,743   

Machinery and equipment

     1,219,968         1,225,293         1,170,168   
  

 

 

    

 

 

    

 

 

 

Property, plant and equipment, at cost

  2,255,604      2,269,123      2,196,806   

Less accumulated depreciation and amortization

  1,344,126      1,326,942      1,274,836   
  

 

 

    

 

 

    

 

 

 

Property, plant and equipment, net

$ 911,478    $ 942,181    $ 921,970   
  

 

 

    

 

 

    

 

 

 

 

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Note E – Intangible Assets

 

     Weighted           March 2015      December 2014  
     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    $ 569,440       $ 345,935       $ 223,505       $ 241,811   

License agreements

     24 years       Accelerated and straight-line      179,692         86,728         92,964         96,736   

Other

     11 years       Straight-line      5,683         1,811         3,872         4,363   
              

 

 

    

 

 

 

Amortizable intangible assets, net

  320,341      342,910   
              

 

 

    

 

 

 

Indefinite-lived intangible assets:

Trademarks and trade names

  1,971,164      2,090,642   
              

 

 

    

 

 

 

Intangible assets, net

$ 2,291,505    $ 2,433,552   
              

 

 

    

 

 

 

Amortization expense for the first quarter of 2015 was $7.7 million. Based on existing levels of amortizable intangible assets noted above, estimated amortization expense for the next five years is:

 

Year

   Estimated
Amortization Expense
 
     In millions  

2015

   $ 29.5   

2016

     28.0   

2017

     27.0   

2018

     26.4   

2019

     25.8   

Note F – Goodwill

Changes in goodwill are summarized by business segment as follows:

 

In thousands    Outdoor &
Action Sports
    Jeanswear     Imagewear      Sportswear      Total  

Balance, December 2014

   $ 1,389,453      $ 219,442      $ 58,747       $ 157,314       $ 1,824,956   

Currency translation

     (24,913     (4,684     —           —           (29,597
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Balance, March 2015

$ 1,364,540    $ 214,758    $ 58,747    $ 157,314    $ 1,795,359   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Accumulated impairment charges for the Outdoor & Action Sports and Sportswear Coalitions were $43.4 million and $58.5 million, respectively, for the periods presented above. No impairment charges were recorded in the first quarter of 2015.

Note G – Pension Plans

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

 

     Three Months Ended March  
In thousands    2015      2014  

Service cost – benefits earned during the period

   $ 7,335       $ 6,085   

Interest cost on projected benefit obligations

     19,403         20,389   

Expected return on plan assets

     (27,771      (22,681

Amortization of deferred amounts:

     

Net deferred actuarial losses

     15,497         9,384   

Deferred prior service costs

     762         1,362   
  

 

 

    

 

 

 

Net periodic pension cost

$ 15,226    $ 14,539   
  

 

 

    

 

 

 

 

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During the first three months of 2015, VF contributed $254.9 million to its defined benefit plans, which included a $250.0 million discretionary contribution to its domestic qualified plan. VF intends to make approximately $18.5 million of additional contributions during the remainder of 2015.

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

During the first quarter of 2015, the Company purchased 10.0 million shares of Common Stock in open market transactions for $730.1 million under its share repurchase program authorized by VF’s Board of Directors. These transactions were treated as treasury stock transactions.

Common Stock outstanding is net of shares held in treasury which are, in substance, retired. During the first quarter of 2015, VF restored 10.0 million treasury shares to an unissued status, after which they were no longer recognized as shares held in treasury. There were no shares held in treasury at the end of March 2015 or December 2014, and 1,500,631 shares held in treasury at the end of March 2014 which were restored to an unissued status during the following quarter. 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 quarter of 2015, the Company purchased 9,800 shares of Common Stock in open market transactions for $0.7 million. Balances related to shares held for deferred compensation plans are as follows:

 

In millions, except share amounts    March
2015
     December
2014
     March
2014
 

Shares held for deferred compensation plans

     647,304         637,504         725,504   

Cost of shares held for deferred compensation plans

   $ 8.4       $ 7.7       $ 9.8   

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 OCI are reported, net of related income taxes, in accumulated other comprehensive income (loss) in stockholders’ equity, as follows:

 

In thousands    March
2015
     December
2014
     March
2014
 

Foreign currency translation

   $ (603,022    $ (356,941    $ 97,060   

Defined benefit pension plans

     (367,841      (377,134      (270,830

Derivative financial instruments

     67,757         31,389         (36,223

Marketable securities

     714         414         504   
  

 

 

    

 

 

    

 

 

 

Accumulated other comprehensive income (loss)

$ (902,392 $ (702,272 $ (209,489
  

 

 

    

 

 

    

 

 

 

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

 

     Three Months Ended March 2015  
In thousands    Foreign
Currency
Translation
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Marketable
Securities
     Total  

Balance, December 2014

   $ (356,941   $ (377,134   $ 31,389      $ 414       $ (702,272
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Other comprehensive income (loss) before reclassifications

  (246,081   —        41,282      300      (204,499

Amounts reclassified from accumulated other comprehensive income (loss)

  —        9,293      (4,914   —        4,379   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Net other comprehensive income (loss)

  (246,081   9,293      36,368      300      (200,120
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance, March 2015

$ (603,022 $ (367,841 $ 67,757    $ 714    $ (902,392
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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     Three Months Ended March 2014  
In thousands    Foreign
Currency
Translation
    Defined
Benefit
Pension Plans
    Derivative
Financial
Instruments
    Marketable
Securities
    Total  

Balance, December 2013

   $ 106,647      $ (277,451   $ (41,754   $ 838      $ (211,720
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) before reclassifications

  (9,587   —        2,243      (334   (7,678

Amounts reclassified from accumulated other comprehensive income (loss)

  —        6,621      3,288      —        9,909   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive income (loss)

  (9,587   6,621      5,531      (334   2,231   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, March 2014

$ 97,060    $ (270,830 $ (36,223 $ 504    $ (209,489
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

In thousands

Details About Accumulated Other

Comprehensive Income (Loss) Components

   Affected Line Item in the
Consolidated Statements
of Income
  Three Months Ended March  
    
     2015     2014  

Amortization of defined benefit pension plans:

      

Net deferred actuarial losses

           (a)   $ (15,497   $ (9,384

Deferred prior service costs

           (a)     (762     (1,362
    

 

 

   

 

 

 
Total before tax   (16,259   (10,746
Tax benefit (expense)   6,966      4,125   
    

 

 

   

 

 

 
Net of tax   (9,293   (6,621
    

 

 

   

 

 

 

Gains (losses) on derivative financial instruments:

Foreign exchange contracts

Net sales   (17,055   1,660   

Foreign exchange contracts

Cost of goods sold   19,368      (5,364

Foreign exchange contracts

Other income (expense), net   6,835      (708

Interest rate contracts

Interest expense   (1,053   (1,004
    

 

 

   

 

 

 
Total before tax   8,095      (5,416
Tax benefit (expense)   (3,181   2,128   
    

 

 

   

 

 

 
Net of tax   4,914      (3,288
    

 

 

   

 

 

 

Total reclassifications for the period

Net of tax $ (4,379 $ (9,909
    

 

 

   

 

 

 

 

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

 

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Note I – Stock-based Compensation

During the first quarter of 2015, VF granted options to employees and nonemployee members of VF’s Board of Directors to purchase 2,399,883 shares of Common Stock at an exercise price of $75.35 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 nonemployee 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:

 

     Three Months Ended
March 2015

Expected volatility

   20% to 29%

Weighted average expected volatility

   22%

Expected term (in years)

   5.9 to 7.5

Dividend yield

   2.0%

Risk-free interest rate

   0.1% to 2.1%

Fair value at date of grant

   $13.71

Also during the first quarter of 2015, VF granted 442,338 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 payout 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 baseline 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 $75.35 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 shareholder 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 2015 RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $3.78 per share.

VF granted 11,556 nonperformance-based restricted stock units to nonemployee members of the Board of Directors during the first quarter of 2015. 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 $75.35 per share.

VF granted 37,300 nonperformance-based restricted stock units to employees during the first quarter of 2015. These units vest four years from the date of grant and each unit 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 $68.47 per share.

VF granted 104,500 restricted shares of VF Common Stock to employees during the first quarter of 2015. These shares generally vest four years from the date of grant. The weighted average fair market value of VF Common Stock at the date the units were granted was $70.98 per share.

Note J – Income Taxes

The effective income tax rate for the first quarter of 2015 was 23.8% compared with 22.2% in the first quarter of 2014. The first quarter of 2015 included a net discrete tax benefit of $6.3 million, which included $4.2 million of tax benefits related to state refund claims and the settlement of state tax audits. The $6.3 million tax benefit reduced the effective income tax rate by 1.7%. The first quarter of 2014 included a net discrete tax benefit of $8.4 million, which included $4.1 million of prior year refund claims and $1.4 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, reducing the effective income tax rate by 2.2%. Without discrete items, the effective income tax rate for the first quarter of 2015 increased by 1.1% compared with the 2014 period primarily due to a lower percentage of projected foreign earnings for 2015, reflecting the impact of changes in foreign currency exchange rates.

VF files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state 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. The IRS has proposed material adjustments to Timberland’s 2011 tax return, and the Company has formally disagreed with the findings. In addition, VF is currently subject to

 

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examination by various state and international 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 adequate. 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 audits and negotiations will conclude during the next 12 months.

During the first quarter of 2015, the amount of net unrecognized tax benefits and associated interest increased by $1.5 million to $109.0 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 $43.5 million related to the completion of examinations and other settlements with tax authorities and the expiration of statutes of limitations, of which $36.8 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 March  
In thousands    2015      2014  

Coalition revenues:

     

Outdoor & Action Sports

   $ 1,606,889       $ 1,574,647   

Jeanswear

     699,655         690,330   

Imagewear

     282,896         263,239   

Sportswear

     135,657         131,505   

Contemporary Brands

     87,537         98,169   

Other

     24,667         22,888   
  

 

 

    

 

 

 

Total coalition revenues

$ 2,837,301    $ 2,780,778   
  

 

 

    

 

 

 

Coalition profit:

Outdoor & Action Sports

$ 260,820    $ 274,490   

Jeanswear

  131,932      129,266   

Imagewear

  41,347      37,772   

Sportswear

  12,841      12,555   

Contemporary Brands

  3,540      7,902   

Other

  14,527      (3,116
  

 

 

    

 

 

 

Total coalition profit

  465,007      458,869   

Corporate and other expenses

  (66,344   (57,771

Interest expense, net

  (19,751   (19,306
  

 

 

    

 

 

 

Income before income taxes

$ 378,912    $ 381,792   
  

 

 

    

 

 

 

 

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Note L – Earnings Per Share

 

     Three Months Ended March  
In thousands, except per share amounts    2015      2014  

Earnings per share – basic:

     

Net income

   $ 288,709       $ 297,193   
  

 

 

    

 

 

 

Weighted average common shares outstanding

  426,255      438,290   
  

 

 

    

 

 

 

Earnings per common share

$ 0.68    $ 0.68   
  

 

 

    

 

 

 

Earnings per share – diluted:

Net income

$ 288,709    $ 297,193   
  

 

 

    

 

 

 

Weighted average common shares outstanding

  426,255      438,290   

Incremental shares from stock options and other dilutive securities

  7,848      7,976   
  

 

 

    

 

 

 

Adjusted weighted average common shares outstanding

  434,103      446,266   
  

 

 

    

 

 

 

Earnings per common share

$ 0.67    $ 0.67   
  

 

 

    

 

 

 

Outstanding options to purchase 2.4 million and 2.8 million shares of Common Stock were excluded from the calculations of diluted earnings per share for the three-month periods ended March 2015 and 2014, respectively, because the effect of their inclusion would have been antidilutive. In addition, 1.0 million and 1.3 million of performance-based restricted stock units were excluded from the calculations of diluted earnings per share for the three-month periods ended March 2015 and 2014, 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.

 

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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:

 

In thousands

   Total
Fair Value
     Fair Value Measurement Using (a)  
      Level 1      Level 2      Level 3  

March 2015

           

Financial assets:

           

Cash equivalents:

           

Money market funds

   $ 231,617       $ 231,617       $ —         $ —     

Time deposits

     144,304         144,304         —           —     

Derivative financial instruments

     158,899         —           158,899         —     

Investment securities

     230,036         212,221         17,815         —     

Other marketable securities

     5,606         5,606         —           —     

Financial liabilities:

           

Derivative financial instruments

     43,682         —           43,682         —     

Deferred compensation

     296,034         —           296,034         —     

December 2014

           

Financial assets:

           

Cash equivalents:

           

Money market funds

   $ 388,635       $ 388,635       $ —         $ —     

Time deposits

     197,303         197,303         —           —     

Derivative financial instruments

     105,264         —           105,264         —     

Investment securities

     228,406         208,874         19,532         —     

Other marketable securities

     5,111         5,111         —           —     

Financial liabilities:

           

Derivative financial instruments

     31,769         —           31,769         —     

Deferred compensation

     295,226         —           295,226         —     

 

(a)  There were no transfers among the levels within the fair value hierarchy during the first quarter of 2015 or the year ended December 2014.

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 (Level 2), 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.

 

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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 March 2015 and December 2014, their carrying values approximated their fair values. Additionally, at March 2015 and December 2014, the carrying value of VF’s long-term debt, including the current portion, was $1,426.2 million and $1,427.6 million, respectively, compared with a fair value of $1,727.6 million and $1,684.1 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 $2.1 billion at March 2015 and $1.9 billion at both December 2014 and March 2014, consisting primarily of contracts hedging exposures to the euro, British pound, Canadian dollar, Mexican peso, Japanese yen, Polish zloty and Swiss franc. Derivative contracts have maturities up to 24 months.

The following table presents outstanding derivatives on an individual contract basis:

 

     Fair Value of Derivatives with
Unrealized Gains
     Fair Value of Derivatives with
Unrealized Losses
 
In thousands    March
2015
     December
2014
     March
2014
     March
2015
    December
2014
    March
2014
 

Foreign currency exchange contracts designated as hedging instruments

   $ 158,557       $ 104,860       $ 16,936       $ (42,975   $ (31,711   $ (38,660

Foreign currency exchange contracts not designated as hedging instruments

     342         404         117         (707     (58     (638
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total derivatives

$ 158,899    $ 105,264    $ 17,053    $ (43,682 $ (31,769 $ (39,298
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

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 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 would be adjusted from the current gross presentation to the net amounts as detailed in the following table:

 

     March 2015     December 2014     March 2014  
In thousands    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
    Derivative
Asset
    Derivative
Liability
 

Gross amounts presented in the Consolidated Balance Sheets

   $ 158,899      $ (43,682   $ 105,264      $ (31,769   $ 17,053      $ (39,298

Gross amounts not offset in the Consolidated Balance Sheets

     (42,701     42,701        (30,724     30,724        (10,320     10,320   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net amounts

$ 116,198    $ (981 $ 74,540    $ (1,045 $ 6,733    $ (28,978
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

In thousands    March
2015
     December
2014
     March
2014
 

Other current assets

   $ 138,564       $ 84,995       $ 13,765   

Accrued liabilities (current)

     (37,949      (26,968      (34,982

Other assets (noncurrent)

     20,335         20,269         3,288   

Other liabilities (noncurrent)

     (5,733      (4,801      (4,316

 

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Cash Flow Hedges

VF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs, operating 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 March
 

Cash Flow Hedging Relationships

   2015      2014  

Foreign currency exchange

   $ 68,010       $ 3,696   
In thousands    Gain (Loss) Reclassified from
Accumulated OCI into Income
Three Months Ended March
 

Location of Gain (Loss)

   2015      2014  

Net sales

   $ (17,055    $ 1,660   

Cost of goods sold

     19,368         (5,364

Other income (expense), net

     6,835         (708

Interest expense

     (1,053      (1,004
  

 

 

    

 

 

 

Total

$ 8,095    $ (5,416
  

 

 

    

 

 

 

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 gains or losses on the related assets and liabilities. Following is a summary of these derivatives included in VF’s Consolidated Statements of Income:

 

In thousands    Location of Gain (Loss)
on Derivatives
Recognized in Income
  Gain (Loss) on Derivatives
Recognized in Income
Three Months Ended March
 

Derivatives Not Designated as Hedges

     2015      2014  

Foreign currency exchange

   Other income (expense), net   $ (1,031    $ (856

Other Derivative Information

There were no significant amounts recognized in earnings for the ineffective portion of any hedging relationships during the three-month periods ended March 2015 and March 2014.

At March 2015, accumulated OCI included $107.2 million of pretax net deferred gains 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 $30.4 million at March 2015, which will be reclassified into interest expense in the Consolidated Statements of Income over the remaining terms of the associated debt instruments. During the quarters ended March 2015 and 2014, VF reclassified $1.1 million and $1.0 million, respectively, of net deferred loss from accumulated OCI into interest expense, and expects to reclassify $4.3 million to interest expense during the next 12 months.

Note O – Recently Issued and Adopted Accounting Standards

In April 2014, the FASB changed the definition and disclosure requirements for discontinued operations. This guidance became effective in the first quarter of 2015, but did not have an impact on VF’s consolidated financial statements.

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

 

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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. In April 2015, the FASB proposed a one-year delay to the adoption date of the standard that would make it effective for VF in the first quarter of 2018. 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.

In February 2015, the FASB issued an update to their existing consolidation model, which changes the analysis a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance will be effective in the first quarter of 2016. The Company is currently evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements.

In April 2015, the FASB issued an update to their accounting guidance related to debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance will be effective in the first quarter of 2016, and the Company will reclassify the debt issuance costs in VF’s consolidated financial statements in accordance with this guidance.

In April 2015, the FASB issued an update to their accounting guidance related to retirement benefits that provides a practical expedient permitting companies to measure defined benefit plan assets and obligations using the month-end that is closest to an entity’s fiscal year-end. This guidance will be effective in the first quarter of 2016 with early adoption permitted. The Company is currently evaluating whether it will adopt this guidance.

Note P – Subsequent Events

In April 2015, VF entered into a $1.75 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires in April 2020. The Global Credit Facility replaced the previous $1.25 billion revolving credit facility which was scheduled to expire in December 2016. The Global Credit Facility may be used to borrow readily available non-US dollar currencies, and has a $50.0 million letter of credit sublimit. VF may request two extensions of one year each, subject to stated terms and conditions. In addition, the Global Credit Facility supports VF’s U.S. commercial paper program, which was also increased to $1.75 billion.

On April 28, 2015, VF’s Board of Directors declared a quarterly cash dividend of $0.32 per share, payable on June 19, 2015 to stockholders of record on June 9, 2015.

 

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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. All references to foreign currency amounts below include the impact of translating foreign currencies into U.S. dollars and the impact of currency rate changes on transactions denominated in a foreign currency.

Highlights of the First Quarter of 2015

 

    Revenues grew to $2.8 billion, a 2% increase from the first quarter of 2014, despite a negative 6% impact from foreign currency.

 

    Outdoor & Action Sports revenues rose 2% over the 2014 quarter. Foreign currency negatively impacted this growth rate by 8%. In addition, revenues were unfavorably impacted by the 53rd week calendar shift, which traded a higher sales week in January for a relatively lower sales week in early April.

 

    Direct-to-consumer revenues were up 5%, including a negative 6% impact from foreign currency, and accounted for 24% of total revenues in the quarter.

 

    International revenues decreased 5%, including a negative 14% impact from foreign currency, and represented 40% of total revenues in the quarter.

 

    Earnings per share were flat at $0.67 compared with the 2014 quarter, reflecting improved operating performance offset by a negative $0.09 impact from foreign currency.

Analysis of Results of Operations

Consolidated Statements of Income

The following table presents a summary of the changes in total revenues from the comparable period in 2014:

 

In millions    First Quarter  

Total revenues – 2014

   $ 2,780.8   

Operations

     223.4   

Impact of foreign currency

     (166.9
  

 

 

 

Total revenues – 2015

$ 2,837.3   
  

 

 

 

VF reported revenue growth of 2% in the first quarter of 2015 driven by an 8% operational improvement that was partially offset by unfavorable foreign currency. Four out of five coalitions reported increased revenues. In addition, excluding the negative impact from foreign currency, sales grew in every region around the world. Additional details on revenues are provided in the section titled “Information by Business Segment.”

VF’s most significant foreign currency exposure relates to business conducted in euro-based countries. However, VF also conducts business in other developed and emerging markets around the world that results in exposure to foreign currencies other than the euro. The continued strengthening of the U.S. dollar relative to these currencies negatively impacted revenues by $166.9 million, or 6%, in the first quarter of 2015 compared with the 2014 period.

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

 

     First Quarter  
     2015     2014  

Gross margin (total revenues less cost of goods sold)

     49.0     49.4

Selling, general and administrative expenses

     35.0     34.9
  

 

 

   

 

 

 

Operating income

  14.0   14.5
  

 

 

   

 

 

 

Gross margin declined 40 basis points in the first quarter of 2015 compared with the 2014 period driven by the negative impact from foreign currency and higher costs, partially offset by the continued shift in our revenue mix towards higher margin businesses, including Outdoor & Action Sports and direct-to-consumer.

 

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Selling, general and administrative expenses as a percentage of total revenues increased 10 basis points during the first quarter of 2015 compared with the 2014 period due to increased investments in direct-to-consumer businesses and slightly higher operating costs due to the stronger Swiss franc. These increases were partially offset by a gain recognized on the sale of a VF Outlet® location and the leverage of operating expenses on higher revenues.

Net interest expense increased by $0.4 million in the first quarter of 2015 from the comparable period in 2014. The increase in net interest expense was primarily due to higher average levels of short-term borrowings and lower amounts of interest capitalized for significant projects, partially offset by increased interest income on cash equivalents. Total outstanding debt averaged $2.1 billion for the first three months of 2015 and $1.5 billion for the same period in 2014. The weighted average interest rates on total outstanding debt were 4.0% and 5.6% for the first quarter of 2015 and 2014, respectively.

The effective income tax rate for the first quarter of 2015 was 23.8% compared with 22.2% in the first quarter of 2014. The first quarter of 2015 included a net discrete tax benefit of $6.3 million, which included $4.2 million of tax benefits related to state refund claims and the settlement of state tax audits. The $6.3 million tax benefit reduced the effective income tax rate by 1.7%. The first quarter of 2014 included a net discrete tax benefit of $8.4 million, which included $4.1 million of prior year refund claims and $1.4 million of net tax benefits related to the realization of previously unrecognized tax benefits and interest, reducing the effective income tax rate by 2.2%. Without discrete items, the effective tax rate for the first quarter of 2015 increased by 1.1% compared with the 2014 period primarily due to a lower percentage of projected foreign earnings for 2015, reflecting the impact of changes in foreign currency exchange rates.

Net income for the first quarter of 2015 was $288.7 million ($0.67 per share) compared with $297.2 million ($0.67 per share) in the 2014 quarter. Earnings per share were flat in the first quarter of 2015 compared with the 2014 period, as improved operating performance was offset by the negative impact from foreign currency. Refer to additional discussion 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 first quarter of 2015 from the comparable period in 2014:

Coalition revenues

 

     First Quarter  
In millions    Outdoor &
Action Sports
    Jeanswear     Imagewear     Sportswear      Contemporary
Brands
    Other      Total  

Coalition revenues – 2014

   $ 1,574.6      $ 690.3      $ 263.2      $ 131.5       $ 98.2      $ 23.0       $ 2,780.8   

Operations

     163.0        40.0        21.6        4.2         (7.0     1.6         223.4   

Impact of foreign currency

     (130.7     (30.6     (1.9     —           (3.7     —           (166.9
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Coalition revenues – 2015

$ 1,606.9    $ 699.7    $ 282.9    $ 135.7    $ 87.5    $ 24.6    $ 2,837.3   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Coalition profit

 

     First Quarter  
In millions    Outdoor &
Action Sports
    Jeanswear     Imagewear     Sportswear      Contemporary
Brands
    Other     Total  

Coalition profit (loss) – 2014

   $ 274.5      $ 129.3      $ 37.8      $ 12.6       $ 7.9      $ (3.2   $ 458.9   

Operations

     20.0        8.6        4.9        0.2         (3.9     17.9        47.7   

Impact of foreign currency

     (33.7     (6.0     (1.4     —           (0.5     —          (41.6
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Coalition profit – 2015

$ 260.8    $ 131.9    $ 41.3    $ 12.8    $ 3.5    $ 14.7    $ 465.0   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

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

Outdoor & Action Sports

 

     First Quarter     Percent
Change
 
Dollars in millions    2015     2014    

Coalition revenues

   $ 1,606.9      $ 1,574.6        2.0

Coalition profit

     260.8        274.5        (5.0 %) 

Operating margin

     16.2     17.4  

Coalition revenues for Outdoor & Action Sports increased 2% in the first quarter of 2015 compared with 2014, reflecting 10% operational growth offset by a negative 8% ($130.7 million) impact from foreign currency. Revenues in the Americas and Asia Pacific regions increased 10% and 15%, respectively, in the first quarter of 2015. European revenues declined 13% due to foreign currency, which unfavorably impacted revenue growth by 18%.

Global revenues for The North Face® brand increased 1% in the first quarter of 2015, as strong direct-to-consumer growth was partially offset by foreign currency. Vans® brand global revenues were up 8% in the first quarter of 2015, reflecting balanced wholesale and direct-to-consumer growth partially offset by foreign currency. Global revenues for the Timberland® brand were flat, as strong wholesale sales were offset by foreign currency.

Global direct-to-consumer revenues grew 7% in the first quarter of 2015 compared with the 2014 period. New store openings, comparable store growth and an expanding e-commerce business all contributed to the direct-to-consumer revenue growth. Wholesale revenues were flat compared with the 2014 period. Both direct-to-consumer and wholesale revenue streams were negatively impacted by 7% and 9%, respectively, from foreign currency. In addition, revenues were negatively impacted by the 53rd week calendar shift mentioned previously.

Operating margin declined 120 basis points in the first quarter of 2015 compared with the 2014 period. The decrease was primarily driven by the negative impact from foreign currency, increased investments in direct-to-consumer businesses and marketing, and the impact of the 53rd week in 2014, partially offset by the leverage of operating expenses on higher revenues.

Jeanswear

 

     First Quarter     Percent
Change
 
Dollars in millions    2015     2014    

Coalition revenues

   $ 699.7      $ 690.3        1.4

Coalition profit

     131.9        129.3        2.1

Operating margin

     18.9     18.7  

Global Jeanswear revenues were up 1% in the first quarter of 2015, which included a negative 4% ($30.6 million) impact from foreign currency compared with 2014. Revenues in the Americas and Asia Pacific regions increased 5% and 7%, respectively, in the first quarter of 2015. European revenues decreased 15% due to foreign currency, which negatively impacted revenue growth in the region by 19%, and softness in Eastern European markets that impacted the Wrangler® brand.

Global revenues for the Wrangler® brand increased 5% in the first quarter of 2015 compared with the 2014 period, driven by 11% and 5% increases in the mass and western specialty businesses, respectively, reflecting successful new product launches. Global revenues for the Lee® brand decreased 1% in the first quarter of 2015 compared with the 2014 period, as wholesale growth in China was more than offset by ongoing challenges in the U.S. mid-tier channel and unfavorable foreign currency.

Operating margin increased 20 basis points in the first quarter of 2015 compared with the 2014 period primarily due to increased volume and the leverage of operating expenses on higher revenues, partially offset by the previously mentioned negative impact from foreign currency in Europe.

 

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Imagewear

 

     First Quarter     Percent
Change
 
Dollars in millions    2015     2014    

Coalition revenues

   $ 282.9      $ 263.2        7.5

Coalition profit

     41.3        37.8        9.5

Operating margin

     14.6     14.3  

Imagewear revenues increased 7% in the first quarter of 2015 compared with the 2014 period. The Image business (occupational apparel and uniforms) grew 15% in the first quarter of 2015, reflecting growth in the government sector and continued strong demand for the Red Kap® brand. Revenues for the Licensed Sports Group business (athletic apparel) were about flat in the first quarter of 2015 compared with the 2014 period, as an increase in the Major League Baseball business was offset by a decrease in National Football League sales.

Operating margin increased 30 basis points during the first quarter of 2015 compared with the 2014 period primarily due to the leverage of operating expenses on higher revenues.

Sportswear

 

     First Quarter     Percent
Change
 
Dollars in millions    2015     2014    

Coalition revenues

   $ 135.7      $ 131.5        3.2

Coalition profit

     12.8        12.6        2.3

Operating margin

     9.5     9.5  

Sportswear revenues increased 3% in the first quarter of 2015 compared with the 2014 period. Nautica® brand revenues increased 2% during the first quarter of 2015, as 4% growth in wholesale revenues was partially offset by a 2% decline in direct-to-consumer revenues primarily due to the strategic exit of less profitable stores. Kipling® brand revenues in the U.S. increased 9%, driven by an increase in direct-to-consumer sales.

Operating margin was flat in the first quarter of 2015 compared with the 2014 period, as increased investments in direct-to-consumer businesses and marketing were offset by favorable business mix and the leverage of operating expenses on higher revenues.

Contemporary Brands

 

     First Quarter     Percent
Change
 
Dollars in millions    2015     2014    

Coalition revenues

   $ 87.5      $ 98.2        (10.8 %) 

Coalition profit

     3.5        7.9        (55.2 %) 

Operating margin

     4.0     8.0  

Revenues for Contemporary Brands decreased 11% in the first quarter of 2015 compared with the 2014 period, reflecting ongoing challenges in demand for women’s contemporary apparel and premium denim, as well as a negative 4% ($3.7 million) impact from foreign currency.

Operating margin decreased 400 basis points in the first quarter of 2015 compared with the 2014 period primarily due to discounting and reduced expense leverage on a lower revenue base.

 

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Other

 

Dollars in millions

   First Quarter     Percent
Change
 
   2015     2014    

Coalition revenues

   $ 24.6      $ 23.0        7.8

Coalition profit (loss)

     14.7        (3.2  

Operating margin

     59.8     (13.9 %)   

VF Outlet® stores in the U.S. sell VF products at prices that are generally higher than what could be realized through external wholesale 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. The increase in coalition profit is due to a $16.6 million gain recognized on the sale of a VF Outlet® location in the first quarter of 2015.

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 “Consolidated Statements of Income” section.

 

     First Quarter      Percent
Change
 
Dollars in millions    2015      2014         

Corporate and other expenses

   $ 66.3       $ 57.8         14.8

Interest expense, net

     19.8         19.3         2.3

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) certain other income and expenses. The increase in corporate and other expenses in the first quarter of 2015 compared to 2014 was primarily due to increased information technology costs due to recent system implementations, additional investments in our global innovation centers, and higher compensation expense.

International Operations

International revenues declined 5% in the first quarter of 2015 compared with the 2014 period due to foreign currency, which negatively impacted international revenue growth by 14% ($166.9 million). Revenues in Europe declined 14%, as foreign currency negatively impacted revenue growth by 18% during the quarter. In the Asia Pacific region, revenues increased 13% in the first quarter of 2015, primarily driven by growth in China. Revenues in the Americas (non-U.S.) region increased 4% during the first quarter of 2015, as growth was tempered by weakening currencies in the region relative to the U.S. dollar. International revenues were 40% and 43% of total VF sales in the first quarter of 2015 and 2014, respectively.

Direct-to-Consumer Operations

Direct-to-consumer revenues grew 5% in the first quarter of 2015 driven by growth in the Americas and Asia Pacific regions, partially offset by a negative 6% impact from foreign currency primarily in Europe. New store openings, comparable store growth and an expanding e-commerce business all contributed to the direct-to-consumer revenue growth. VF opened 23 stores in the first quarter of 2015, bringing the total number of VF-owned retail stores to 1,395 at March 2015. Direct-to-consumer revenues reached 24% of total revenues in the first quarter of 2015 compared with 23% in the 2014 period.

Analysis of Financial Condition

Consolidated Balance Sheets

The following discussion refers to significant changes in balances at March 2015 compared with December 2014:

 

    Increase in inventories—due to the seasonality of the business and anticipated sales growth in 2015.

 

    Increase in other current assets—primarily due to unrealized hedging gains and higher levels of prepaid expenses.

 

    Decrease in intangible assets—due to foreign currency exchange rate fluctuations and amortization expense.

 

    Increase in short-term borrowings—due to commercial paper borrowings used to support seasonal working capital requirements, share repurchases and a $250.0 million pension contribution in the first quarter of 2015.

 

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

 

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

 

    Decrease in other liabilities—primarily due to an improvement in the underfunded status of the defined benefit pension plans, resulting from a $250.0 million pension contribution in the first quarter of 2015.

The following discussion refers to significant changes in balances at March 2015 compared with March 2014:

 

    Increase in inventories —due to anticipated sales growth in 2015.

 

    Increase in other current assets— primarily due to unrealized hedging gains.

 

    Decrease in intangible assets— driven by (i) impairment charges for customer relationship assets and indefinite-lived trademarks during the fourth quarter of 2014, (ii) the impact of foreign currency exchange rate fluctuations and (iii) amortization expense.

 

    Decrease in goodwill—resulting from an impairment charge during the fourth quarter of 2014 and the impact of foreign currency exchange rate fluctuations.

 

    Increase in other assets—resulting from (i) an overfunded status of the domestic qualified pension plan, (ii) deferred software costs primarily related to system implementations and (iii) unrealized hedging gains.

 

    Increase in short-term borrowings—due to commercial paper borrowings used to fund higher levels of share repurchases compared with the first quarter of 2014, and a $250.0 million pension contribution in the first quarter of 2015.

 

    Decrease in other liabilities— primarily due to lower deferred income taxes and an improvement in the underfunded status of the defined benefit pension plans.

Liquidity and Cash Flows

The financial condition of VF is reflected in the following:

 

Dollars in millions    March
2015
    December
2014
    March
2014
 

Working capital

   $ 1,803.2      $ 2,565.6      $ 1,993.0   

Current ratio

     1.8 to 1        2.6 to 1        2.3 to 1   

Debt to total capital ratio

     33.7     20.5     22.7

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 increase in the debt to total capital ratio at March 2015 compared to December 2014 and March 2014 was primarily due to the increase in short-term borrowings as explained above.

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 27.3% at March 2015, 7.8% at December 2014 and 19.2% at March 2014.

In summary, our cash flows were as follows:

 

In thousands

   Three Months  
   2015      2014  

Net cash (used) provided by operating activities

   $ (430,624    $ 13,654   

Net cash used by investing activities

     (59,119      (99,133

Net cash provided (used) by financing activities

     205,094         (366,260

Cash (Used) Provided by Operating Activities

VF’s primary source of liquidity is the strong annual cash flow provided by operating activities, which is dependent on the level of net income and changes in working capital. Cash used by operating activities for the first quarter of 2015 was $430.6 million compared with cash provided by operating activities of $13.7 million for the 2014 period. The decline in cash flows was primarily due to a $250.0 million discretionary contribution to the domestic qualified pension plan in the first quarter of 2015, and lower cash collections during the first quarter of 2015 due to the 53-week calendar of 2014, which shifted a relatively higher cash collection week into fiscal 2014.

 

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Cash Used by Investing Activities

Cash used by investing activities for the first quarter of 2015 decreased to $59.1 million from $99.1 million in the 2014 period. VF’s investing activities in the first quarter of 2015 related primarily to software purchases of $36.7 million and capital expenditures of $33.0 million, partially offset by $16.7 million of proceeds from the sale of a VF Outlet® location during the quarter. Capital expenditures and software purchases decreased $16.3 million and $7.9 million, respectively, compared with the 2014 period due to the completion of a number of significant projects and system implementations during 2014.

Cash Provided (Used) by Financing Activities

Cash provided by financing activities in the first quarter of 2015 was $205.1 million compared with a cash usage of $366.3 million in the first quarter of 2014. The increased cash flow from financing activities in the first quarter of 2015 compared with the 2014 period was primarily due to higher levels of short-term borrowings, partially offset by incremental share repurchases and cash dividends paid in 2015.

During the first quarter of 2015, VF purchased 10.0 million shares of its Common Stock in open market transactions at a total cost of $730.8 million (average price per share of $73.01). During the first quarter of 2014, VF purchased 9.2 million shares of its Common Stock in open market transactions at a total cost of $554.6 million (average price per share of $60.53). Due to the three-day settlement period on stock trades, $40.8 million of the total cost related to 667,500 repurchased shares was not transferred to the broker until the second quarter of 2014, and thus was excluded from financing activities in the Consolidated Statement of Cash Flows for the first quarter of 2014.

As of the end of the first quarter of 2015, the Company had 30.7 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. Throughout the first quarter of 2015, VF maintained a $1.25 billion senior unsecured revolving line of credit, which supported its $1.25 billion U.S. commercial paper program for short-term seasonal working capital requirements. Commercial paper borrowings and standby letters of credit issued as of March 2015 were $1,036.0 million and $16.5 million, respectively, leaving $197.5 million available for borrowing against this facility at March 2015.

In April 2015, VF entered into a $1.75 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires in April 2020. The Global Credit Facility replaced the $1.25 billion revolving credit facility discussed above which was scheduled to expire in December 2016. The Global Credit Facility may be used to borrow readily available non-US dollar currencies, and has a $50.0 million letter of credit sublimit. VF may request two extensions of one year each, subject to stated terms and conditions. In addition, the Global Credit Facility supports VF’s U.S. commercial paper program, which was also increased to $1.75 billion.

VF’s favorable credit agency ratings allow for access to additional liquidity at competitive rates. At the end of March 2015, 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 2014 Form 10-K provided a table summarizing VF’s contractual obligations and commercial commitments at the end of 2014 that would require the use of funds. Since the filing of the 2014 Form 10-K, there have been no material changes in the disclosed amounts, except as noted below:

 

    Inventory purchase obligations increased by approximately $867.7 million at the end of March 2015 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.

 

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Recently Issued and Adopted Accounting Standards

In April 2014, the FASB changed the definition and disclosure requirements for discontinued operations. This guidance became effective in the first quarter of 2015, but did not have an impact on VF’s consolidated financial statements.

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. In April 2015, the FASB proposed a one-year delay to the adoption date of the standard that would make it effective for VF in the first quarter of 2018. 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.

In February 2015, the FASB issued an update to their existing consolidation model, which changes the analysis a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance will be effective in the first quarter of 2016. The Company is currently evaluating the impact that adopting this guidance will have on VF’s consolidated financial statements.

In April 2015, the FASB issued an update to their accounting guidance related to debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance will be effective in the first quarter of 2016, and the Company will reclassify the debt issuance costs in VF’s consolidated financial statements in accordance with this guidance.

In April 2015, the FASB issued an update to their accounting guidance related to retirement benefits that provides a practical expedient permitting companies to measure defined benefit plan assets and obligations using the month-end that is closest to an entity’s fiscal year-end. This guidance will be effective in the first quarter of 2016 with early adoption permitted. The Company is currently evaluating whether it will adopt this guidance.

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 2014 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 2014 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.

 

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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, footwear and accessories; fluctuations in the price, availability and quality of raw materials and contracted products; disruption to VF’s distribution system; foreign currency fluctuations; 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 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; possible goodwill and other asset impairment; maintenance by VF’s licensees and distributors of the value of VF’s brands; 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 2014 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 2014 Form 10-K. There have been no material changes to the legal proceedings from those described in the 2014 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 2014 Form 10-K. There have been no material changes to the risk factors from those disclosed in the 2014 Form 10-K.

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

(c) Issuer purchases of equity securities:

 

First Quarter 2015    Total
Number of
Shares
Purchased (1)
     Weighted
Average
Price Paid
per Share
     Total Number of
Shares Purchased
as Part of Publicly
Announced Programs (1)
     Maximum Number
of Shares that May
Yet be Purchased
Under the Program
 

January 4 – January 31, 2015

     5,001,600       $ 72.76         5,001,600         35,723,476   

February 1 – February 28, 2015

     4,697,233         73.02         4,697,233         31,026,243   

March 1 – April 4, 2015

     310,967         76.90         310,967         30,715,276   
  

 

 

       

 

 

    

Total

  10,009,800      10,009,800   
  

 

 

       

 

 

    

 

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(1)  Includes 9,800 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 Scott A. Roe, 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 Scott A. Roe, 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

 

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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.

 

V.F. CORPORATION
(Registrant)
By:  

/s/ Scott A. Roe

Scott A. Roe
Vice President and Chief Financial Officer (Chief Financial Officer)
Date: May 12, 2015 By:

/s/ Bryan H. McNeill

Bryan H. McNeill
Vice President — Controller (Chief Accounting Officer)

 

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