UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest |
April 29, 2016 |
V.F.
Corporation
(Exact
Name of Registrant as Specified in Charter)
Pennsylvania |
1-5256 |
23-1180120 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
105 Corporate Center Boulevard Greensboro, North Carolina |
27408 |
|
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, |
336-424-6000 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and Item 7.01, “Regulation FD Disclosure.”
On April 29, 2016, V.F. Corporation issued a press release setting forth its first quarter 2016 earnings. A copy of the press release is attached hereto as Exhibit 99 and hereby incorporated by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits. | |
The following is furnished as an exhibit to this report: | ||
99 |
V.F. Corporation press release dated April 29, 2016. |
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 hereunto duly authorized.
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V.F. CORPORATION |
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(Registrant) |
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By: |
/s/ Scott A. Roe |
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Scott A. Roe |
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Vice President & Chief Financial Officer |
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Date: |
April 29, 2016 |
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EXHIBIT INDEX
Exhibit No. |
Description |
99 |
V.F. Corporation press release dated April 29, 2016. |
Exhibit 99
VF Reports First Quarter 2016 Results
GREENSBORO, N.C.--(BUSINESS WIRE)--April 29, 2016--VF Corporation (NYSE: VFC) today reported financial results for its first quarter ended April 2, 2016. All per share amounts are presented on a diluted basis. This release refers to “currency neutral” and “reported” amounts, terms that are described under the “Currency Neutral – Excluding the Impact of Foreign Currency” paragraph. Reconciliations of GAAP measures to currency neutral amounts are presented in the supplemental financial information included with this release, which identifies and quantifies all excluded items. Unless otherwise noted, currency neutral and reported amounts are the same.
“Our first quarter results demonstrate the ability of our diversified business model to perform as expected in an inconsistent environment,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “By leveraging our strengths – driving innovation into the marketplace, connecting with consumers and operating with financial discipline – we are on track to deliver results consistent with our 2016 outlook, while also delivering on our commitment to shareholders.”
Income Statement Review
Coalition Review
First quarter revenue for Outdoor & Action Sports was up 2 percent (up 4 percent currency neutral) to $1.6 billion.
First quarter operating income for Outdoor & Action Sports declined 13 percent to $228 million (flat currency neutral). Operating margin was 13.9 percent compared to 16.2 percent in the same period last year. More than half of this decrease was due to foreign currency fluctuations.
Jeanswear first quarter revenue was up 2 percent (up 4 percent currency neutral) to $711 million.
Operating income for Jeanswear in the first quarter was up 4 percent to $137 million, with a 40 basis point increase in operating margin to 19.3 percent.
Imagewear first quarter revenue was down 5 percent to $269 million (down 4 percent currency neutral) with the Licensed Sports Group business remaining flat and a high single-digit decline in the workwear business, which continues to be impacted by considerably less oil and gas exploration. First quarter operating income for Imagewear was flat at $42 million, with an 80 basis point increase in operating margin to 15.4 percent, driven by pricing and changes in foreign currency rates related to our manufacturing operations.
Sportswear first quarter revenue declined 13 percent to $118 million including a 14 percent decrease in Nautica® brand revenues and an 8 percent decrease in the Kipling® brand’s North American business compared with the same period last year, reflecting ongoing challenges in demand for the sector. Additionally, the strategic decision to license the women’s sleepwear and men’s underwear businesses negatively impacted Nautica® brand revenue by about 6 percentage points in the quarter. Operating income for Sportswear decreased 63 percent to $5 million with a 550 basis point decrease in operating margin to 4.0 percent.
Contemporary Brands’ first quarter revenue was down 15 percent to $74 million, including a 53 percent decline in operating income.
International Review
International revenue in the first quarter was up 1 percent (up 4 percent currency neutral). Revenue in Europe was up 1 percent (up 2 percent currency neutral) and in the Asia-Pacific region was up 2 percent (up 6 percent currency neutral). Revenue in the Americas (non-U.S.) region was down 1 percent (up 12 percent currency neutral). The international business represented 41 percent of total VF first quarter sales, compared with 40 percent in last year’s same period.
Direct-to-Consumer Review
Direct-to-consumer revenue was up 7 percent (up 8 percent currency neutral) in the first quarter driven by low double-digit growth in the Outdoor & Action Sports business, which was offset by a mid-teen percentage rate decline in Sportswear and a high single-digit decline in the Contemporary Brands coalition. There were 1,541 VF-owned retail stores at the end of the quarter. Direct-to-consumer revenue reached 26 percent of total revenue in the first quarter compared with 24 percent in the 2015 period.
Balance Sheet Review
2016 Outlook Highlights
There are no changes to management’s full-year outlook given on February 19, 2016:
Revenue in the first half is expected to be flat on a reported basis, up at a low single-digit percentage rate currency neutral. First half earnings per share should be down at a low double-digit percentage rate on a reported basis, down low single-digit currency neutral. As a reminder, the second quarter of 2015 benefitted by $0.02 in earnings per share from a lower tax rate primarily due to the settlement of prior years’ tax audits. We continue to expect currency neutral revenue growth in the second half of 2016 to increase at a high single-digit percentage rate, with the strongest performance coming in the fourth quarter. We expect second half reported earnings per share to increase at a mid-teen percentage rate, or up at a high-teen percentage rate currency neutral.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.37 per share, payable on June 20, 2016, to shareholders of record on June 10, 2016.
Currency Neutral – Excluding the Impact of Foreign Currency
This release refers to “currency neutral” amounts, which exclude both the impact of translating foreign currencies into U.S. dollars and the impact of currency rate changes on foreign currency denominated transactions. This release also refers to “reported” amounts in accordance with U.S. generally accepted accounting principles (“GAAP”), which include translation and transactional impacts from foreign currency exchange rates. Reconciliations of GAAP measures to currency neutral amounts for the first quarter of 2016 are presented in the supplemental financial information included with this release, which identify and quantify all excluded items.
Webcast Information
VF will hold its 2016 first quarter conference call and webcast today at 8:30 a.m. Eastern Time. Interested parties should call (888) 204-4610 (U.S.) or (913) 981-5590 (international) to access the call. The conference call will be broadcast live and accessible at www.vfc.com. A replay of the conference call will be available through May 6, 2016 at the same location or via telephone at 877-870-5176 (access code: 4650569).
About VF
VF Corporation (NYSE: VFC) is a global leader in the design, manufacture, marketing and distribution of branded lifestyle apparel, footwear and accessories. The company’s highly diversified portfolio of 30 powerful brands spans numerous geographies, product categories, consumer demographics and sales channels, giving VF a unique industry position and the ability to create sustainable, long-term growth for our customers and shareholders. The company’s largest brands are The North Face®, Vans®, Timberland®, Wrangler®, Lee® and Nautica®. For more information, visit www.vfc.com.
Forward-looking Statements
Certain statements included in this release and the attachments are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to: foreign currency fluctuations; the level of consumer demand for apparel, footwear and accessories; disruption to VF’s distribution system; VF's reliance on a small number of large customers; the financial strength of VF's customers; VF's ability to implement its business strategy; VF's ability to grow its international and direct-to-consumer businesses; VF’s and its customers’ and vendors’ ability to maintain the strength and security of information technology systems; stability of VF's manufacturing facilities and foreign suppliers; continued use by VF's suppliers of ethical business practices; VF’s ability to accurately forecast demand for products; VF's ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; changes in tax liabilities; legal, regulatory, political and economic risks; and adverse or unexpected weather conditions. More information on potential factors that could affect VF's financial results is included from time to time in VF's public reports filed with the Securities and Exchange Commission, including VF's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
VF CORPORATION Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share amounts) |
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Three Months Ended March |
% |
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2016* | 2015 | Change | |||||||||
Net sales | $ | 2,809,124 | $ | 2,803,302 | 0 | % | |||||
Royalty income | 30,176 | 33,999 | (11 | %) | |||||||
Total revenues | 2,839,300 | 2,837,301 | 0 | % | |||||||
Costs and operating expenses | |||||||||||
Cost of goods sold | 1,472,006 | 1,446,547 | 2 | % | |||||||
Selling, general and administrative expenses | 1,031,042 | 992,919 | 4 | % | |||||||
Total costs and operating expenses | 2,503,048 | 2,439,466 | 3 | % | |||||||
Operating income | 336,252 | 397,835 | (15 | %) | |||||||
Interest, net | (20,155 | ) | (19,751 | ) | 2 | % | |||||
Other income (expense), net | 1,290 | 828 | 56 | % | |||||||
Income before income taxes | 317,387 | 378,912 | (16 | %) | |||||||
Income taxes | 57,118 | 90,203 | (37 | %) | |||||||
Net income | $ | 260,269 | $ | 288,709 | (10 | %) | |||||
Earnings per common share | |||||||||||
Basic | $ | 0.62 | $ | 0.68 | (9 | %) | |||||
Diluted | $ | 0.61 | $ | 0.67 | (9 | %) | |||||
Weighted average shares outstanding | |||||||||||
Basic | 421,748 | 426,255 | |||||||||
Diluted | 429,133 | 434,103 | |||||||||
Cash dividends per common share | $ | 0.37 | $ | 0.32 | 16 | % | |||||
Basis of presentation of condensed consolidated financial statements: VF operates and reports using 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 2016, December 2015 and March 2015 relate to the 13-week fiscal period ended April 2, 2016, the 52-week fiscal period ended January 2, 2016 and the 13-week fiscal period ended April 4, 2015, respectively.
* Reflects the impact of adopting the new accounting guidance on stock compensation as of the beginning of the first quarter of 2016, which resulted in a $15.8 million tax benefit in the consolidated statement of income for the three months ended March 2016. |
VF CORPORATION Condensed Consolidated Balance Sheets (Unaudited) (In thousands) |
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March | December |
March |
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2016 | 2015 | 2015* | |||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and equivalents | $ | 585,835 | $ | 945,605 | $ | 655,483 | |||
Accounts receivable, net | 1,293,275 | 1,319,558 | 1,283,216 | ||||||
Inventories | 1,762,568 | 1,611,994 | 1,624,234 | ||||||
Other current assets | 331,196 | 285,979 | 365,169 | ||||||
Total current assets | 3,972,874 | 4,163,136 | 3,928,102 | ||||||
Property, plant and equipment | 986,162 | 988,159 | 911,478 | ||||||
Intangible assets | 2,170,817 | 2,112,619 | 2,291,505 | ||||||
Goodwill | 1,804,094 | 1,788,407 | 1,795,359 | ||||||
Other assets | 898,316 | 587,221 | 672,261 | ||||||
Total assets | $ | 9,832,263 | $ | 9,639,542 | $ | 9,598,705 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities | |||||||||
Short-term borrowings | $ | 1,137,205 | $ | 449,590 | $ | 1,067,961 | |||
Current portion of long-term debt | 3,489 | 13,279 | 3,384 | ||||||
Accounts payable | 429,694 | 689,594 | 457,744 | ||||||
Accrued liabilities | 959,079 | 789,250 | 743,176 | ||||||
Total current liabilities | 2,529,467 | 1,941,713 | 2,272,265 | ||||||
Long-term debt | 1,401,233 | 1,401,820 | 1,413,333 | ||||||
Other liabilities | 1,007,617 | 911,171 | 1,008,842 | ||||||
Total liabilities | 4,938,317 | 4,254,704 | 4,694,440 | ||||||
Stockholders' equity | 4,893,946 | 5,384,838 | 4,904,265 | ||||||
Total liabilities and stockholders' equity | $ | 9,832,263 | $ | 9,639,542 | $ | 9,598,705 | |||
* Reflects the impact of adopting the new accounting guidance on classification of debt issuance costs and deferred income taxes as of December 2015 on a retrospective basis. The new guidance requires classification of debt issuance costs related to a recognized debt liability as a direct reduction of that liability, and classification of all deferred taxes as noncurrent. |
VF CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
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Three Months Ended March | ||||||||
2016 | 2015* | |||||||
Operating activities | ||||||||
Net income | $ | 260,269 | $ | 288,709 | ||||
Depreciation and amortization | 68,030 | 65,880 | ||||||
Other adjustments | (473,885 | ) | (755,535 | ) | ||||
Cash used by operating activities | (145,586 | ) | (400,946 | ) | ||||
Investing activities | ||||||||
Capital expenditures | (36,336 | ) | (33,028 | ) | ||||
Software purchases | (6,335 | ) | (36,708 | ) | ||||
Other, net | (587 | ) | 10,617 | |||||
Cash used by investing activities | (43,258 | ) | (59,119 | ) | ||||
Financing activities | ||||||||
Net increase in short-term borrowings | 685,985 | 1,047,660 | ||||||
Payments on long-term debt | (10,695 | ) | (1,414 | ) | ||||
Purchases of treasury stock | (713,767 | ) | (730,811 | ) | ||||
Cash dividends paid | (155,584 | ) | (135,912 | ) | ||||
Net impact of stock issuance | 4,102 | (4,107 | ) | |||||
Cash (used) provided by financing activities | (189,959 | ) | 175,416 | |||||
Effect of foreign currency rate changes on cash and equivalents | 19,033 | (31,763 | ) | |||||
Net change in cash and equivalents | (359,770 | ) | (316,412 | ) | ||||
Cash and equivalents - beginning of year | 945,605 | 971,895 | ||||||
Cash and equivalents - end of period | $ | 585,835 | $ | 655,483 | ||||
* Reflects the impact of adopting the new accounting guidance on stock compensation as of the beginning of the first quarter of 2016, which resulted in a $29.7 million reclassification of cash flows from financing activities to operating activities in the consolidated statement of cash flows for the three months ended March 2015. |
VF CORPORATION Supplemental Financial Information Business Segment Information (Unaudited) (In thousands) |
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% Change Currency Neutral** |
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Three Months Ended March | % | |||||||||||||
2016 | 2015 | Change | ||||||||||||
Coalition revenues | ||||||||||||||
Outdoor & Action Sports | $ | 1,644,395 | $ | 1,606,889 | 2 | % | 4 | % | ||||||
Jeanswear | 710,590 | 699,655 | 2 | % | 4 | % | ||||||||
Imagewear | 269,125 | 282,896 | (5 | %) | (4 | %) | ||||||||
Sportswear | 118,397 | 135,657 | (13 | %) | (13 | %) | ||||||||
Contemporary Brands | 74,356 | 87,537 | (15 | %) | (15 | %) | ||||||||
Other | 22,437 | 24,667 | (9 | %) | (9 | %) | ||||||||
Total coalition revenues | $ | 2,839,300 | $ | 2,837,301 | 0 | % | 2 | % | ||||||
Coalition profit | ||||||||||||||
Outdoor & Action Sports | $ | 227,771 | $ | 260,820 | (13 | %) | 0 | % | ||||||
Jeanswear | 137,294 | 131,932 | 4 | % | 4 | % | ||||||||
Imagewear | 41,515 | 41,347 | 0 | % | (5 | %) | ||||||||
Sportswear | 4,776 | 12,841 | (63 | %) | (63 | %) | ||||||||
Contemporary Brands | 1,669 | 3,540 | (53 | %) | (51 | %) | ||||||||
Other | (2,358 | ) | 14,527 | * | * | |||||||||
Total coalition profit | 410,667 | 465,007 | (12 | %) | (5 | %) | ||||||||
Corporate and other expenses | (73,125 | ) | (66,344 | ) | 10 | % | 10 | % | ||||||
Interest, net | (20,155 | ) | (19,751 | ) | 2 | % | 2 | % | ||||||
Income before income taxes | $ | 317,387 | $ | 378,912 | (16 | %) | (8 | %) | ||||||
* Calculation not meaningful | ||||||||||||||
** Refer to currency neutral definition on following page |
VF CORPORATION Supplemental Financial Information Business Segment Information – Currency Neutral Basis (Unaudited) (In thousands) |
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Three Months Ended March 2016 | ||||||||||||
As Reported | Adjust for Foreign | |||||||||||
under GAAP | Currency Exchange | Currency Neutral | ||||||||||
Coalition revenues | ||||||||||||
Outdoor & Action Sports | $ | 1,644,395 | $ | 23,558 | $ | 1,667,953 | ||||||
Jeanswear | 710,590 | 17,324 | 727,914 | |||||||||
Imagewear | 269,125 | 1,065 | 270,190 | |||||||||
Sportswear | 118,397 | - | 118,397 | |||||||||
Contemporary Brands | 74,356 | 78 | 74,434 | |||||||||
Other | 22,437 | - | 22,437 | |||||||||
Total coalition revenues | $ | 2,839,300 | $ | 42,025 | $ | 2,881,325 | ||||||
Coalition profit | ||||||||||||
Outdoor & Action Sports | $ | 227,771 | $ | 32,162 | $ | 259,933 | ||||||
Jeanswear | 137,294 | (289 | ) | 137,005 | ||||||||
Imagewear | 41,515 | (2,189 | ) | 39,326 | ||||||||
Sportswear | 4,776 | - | 4,776 | |||||||||
Contemporary Brands | 1,669 | 73 | 1,742 | |||||||||
Other | (2,358 | ) | - | (2,358 | ) | |||||||
Total coalition profit | 410,667 | 29,757 | 440,424 | |||||||||
Corporate and other expenses | (73,125 | ) | (6 | ) | (73,131 | ) | ||||||
Interest, net | (20,155 | ) | - | (20,155 | ) | |||||||
Income before income taxes | $ | 317,387 | $ | 29,751 | $ | 347,138 | ||||||
Diluted earnings per share growth | (9 | %) | 9 | % | 0 | % | ||||||
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Currency Neutral Financial Information
VF is a global company that reports financial information in U.S. dollars in accordance with GAAP. Foreign currency exchange rate fluctuations affect the amounts reported by VF from translating its foreign revenues and expenses into U.S. dollars, and from entering foreign currency transactions. These rate fluctuations can have a significant effect on reported operating results. As a supplement to our reported operating results, we present currency neutral financial information, which is a non-GAAP financial measure that excludes the incremental current year impact of foreign currency exchange. We use currency neutral information to provide a framework to assess how our business performed excluding the effects of changes in the rates used to calculate foreign currency translation and transaction gains and losses. Management believes this information is useful to investors to facilitate comparison of operating results and better identify trends in our businesses.
To calculate foreign currency translation on a currency neutral basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period). Similarly, transaction gains and losses on a currency neutral basis are calculated using exchange rates from the comparable period of the prior year.
These currency neutral performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with GAAP. The currency neutral information presented may not be comparable to similarly titled measures reported by other companies.
CONTACT:
VF Corporation
Lance Allega, 336-424-6082
Vice
President, Investor Relations
or
Craig Hodges, 336-424-5636
Senior
Director, Corporate Communications