Market Overview

VF Corporation Reports Fourth Quarter and Full Year Fiscal 2019 Results; Provides Outlook for Full Year Fiscal 2020

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  • Full year fiscal 2019 revenue from continuing operations increased
    12 percent (up 13 percent in constant dollars) to $13.8 billion;
    excluding acquisitions net of divestitures, revenue increased 7
    percent (up 8 percent in constant dollars);
  • Full year fiscal 2019 Active segment revenue increased 16 percent
    (up 18 percent in constant dollars) including a 24 percent (26 percent
    in constant dollars) increase in Vans
    ®
    brand revenue; Outdoor segment revenue increased 9 percent (up 10
    percent in constant dollars) including a 9 percent (10 percent in
    constant dollars) increase in The North Face
    ®
    brand revenue and a 5-percentage point revenue growth contribution
    from acquisitions;
  • Full year fiscal 2019 international revenue increased 10 percent
    (up 13 percent in constant dollars) including a 5-percentage point
    revenue growth contribution from acquisitions net of divestitures;
    China revenue increased 22 percent (up 24 percent in constant
    dollars), including a 5-percentage point revenue growth contribution
    from acquisitions;
  • Full year fiscal 2019 direct-to-consumer revenue increased 14
    percent (up 15 percent in constant dollars) including a 3-percentage
    point revenue growth contribution from acquisitions net of
    divestitures; Digital revenue increased 32 percent (up 33 percent in
    constant dollars), including an 8-percentage point revenue growth
    contribution from acquisitions net of divestitures;
  • Full year fiscal 2019 reported gross margin from continuing
    operations increased 10 basis points to 50.7 percent. On an adjusted
    basis, gross margin increased 30 basis points to 51.0 percent;
  • Full year fiscal 2019 reported earnings per share from continuing
    operations was $3.14. Adjusted earnings per share from continuing
    operations increased 20 percent to $3.78 (up 22 percent in constant
    dollars) including a $0.15 per share contribution from acquisitions
    net of divestitures. Adjusted earnings per share from continuing
    operations includes $20 million, or $0.04 per share, of incremental
    investment relative to the company's prior adjusted earnings per share
    outlook of $3.73 provided on January 18, 2019;
  • Full year fiscal 2019 cash flow from operations reached
    approximately $1.7 billion. On an adjusted basis, cash flow from
    operations reached nearly $1.8 billion;
  • Full year fiscal 2020 revenue is expected to be in the range of
    $11.7 billion to $11.8 billion, reflecting growth of approximately 5
    percent to 6 percent compared to historical results excluding Kontoor
    Brands, or approximately 7 percent to 8 percent on a constant dollar
    basis, excluding the impact of acquisitions net of divestitures; and,
  • Full year fiscal 2020 adjusted earnings per share is expected to be
    in the range of $3.30 to $3.35, reflecting estimated growth of 15
    percent to 17 percent compared to historical results excluding Kontoor
    Brands, or approximately 17 percent to 19 percent on a constant dollar
    basis, excluding the impact of acquisitions net of divestitures.

VF Corporation (NYSE:VFC) today reported financial results for its
fourth quarter and full year ended March 30, 2019. All per share amounts
are presented on a diluted basis. This release refers to "reported" and
"constant dollar" amounts, terms that are described under the heading
"Constant Currency - Excluding the Impact of Foreign Currency." Unless
otherwise noted, "reported" and "constant dollar" amounts are the same.
This release also refers to "continuing" and "discontinued" operations
amounts, which are concepts described under the heading "Discontinued
Operations - Nautica® Brand Business and
Licensing Business." Unless otherwise noted, results presented are based
on continuing operations. This release also refers to "adjusted"
amounts, a term that is described under the heading "Adjusted Amounts -
Excluding Williamson-Dickie, Icebreaker®, Altra®,
Reef®, and Jeans Spin-Off Transaction and Deal
Related Expenses, Costs Related to Office Relocations and Other
Strategic Business Decisions, and the Provisional Impact of U.S. Tax
Legislation." This release also refers to "Excluding Kontoor Brands"
amounts, a term that is described under the heading "Separation of
Kontoor Brands." Unless otherwise noted, "reported" and "adjusted"
amounts are the same.

"Fiscal 2019 marked one of the most significant periods of
transformation in VF's 120-year history, highlighted by our announcement
to spin off our Jeans business as an independent, publicly traded
company," said Steve Rendle, Chairman, President and Chief Executive
Officer. "Despite the tremendous workload, we remained sharply focused
and delivered another year of strong financial results and top quartile
returns to our shareholders."

Rendle continued, "As we enter fiscal 2020, our portfolio is well
positioned, and our growth and momentum are strong, fueled by the
investments we are making in support of our long-term strategy. The bold
decisions we continue to make to evolve our company underpin the
transformational journey we're on to deliver on our commitment to be a
purpose-led, performance-driven and value-creating enterprise capable of
delivering sustainable long-term shareholder value."

Separation of Kontoor Brands

As previously announced, on April 30, 2019, VF's Board of Directors
approved the separation of its Jeans business (the "Separation"), which
will be achieved through the distribution of 100 percent of the shares
of Kontoor Brands, Inc. ("Kontoor Brands") to holders of VF common stock
on the record date of May 10, 2019. VF stockholders of record will
receive one share of Kontoor Brands common stock for every seven shares
of VF common stock. The distribution is expected to be completed after
the close of the New York Stock Exchange today, May 22, 2019. Following
the Separation, Kontoor Brands will be an independent, publicly traded
company, and VF will retain no ownership interest in Kontoor Brands.
Kontoor Brands has received approval for the listing of its common stock
on the New York Stock Exchange under the symbol "KTB."

In the context of VF's review of historical results, this release refers
to "excluding Kontoor Brands" amounts, which exclude the historical
results of VF's Jeans reportable segment, Wrangler®
RIGGS
brand (included in the Work reportable segment) and VF
Outlet
TM business (included in the Other category
presented in the reconciliation of reportable segment results). The
results are not indicative of the results of Kontoor Brands as a
standalone entity, and are not representative of VF's discontinued
operations view of consolidated results after the separation of Kontoor
Brands is complete.

In addition, the release provides adjusted fiscal 2020 outlook
information reflecting management's best estimates of the impact the
separation of Kontoor Brands may have on VF's fiscal 2019 financial
information and fiscal 2020 outlook on a discontinued operations basis,
along with other adjustments. VF's analysis of the separation of Kontoor
Brands has not been completed and is subject to change.

In connection with a distribution date of May 22, 2019, VF will file its
Current Report on Form 8-K, no later than May 29, 2019, which will
include supplemental financial information on VF, illustrating Kontoor
Brands on a discontinued operations basis under U.S. generally accepted
accounting principles ("GAAP"), for certain historical periods.

Constant Currency - Excluding the Impact of Foreign Currency

This release 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. This release also refers to "constant dollar" amounts, which
exclude the impact of translating foreign currencies into U.S. dollars
and on foreign currency-denominated transactions in countries with
highly inflationary economies. Reconciliations of GAAP measures to
constant currency amounts are presented in the supplemental financial
information included with this release, which identifies and quantifies
all excluded items, and provides management's view of why this
information is useful to investors.

Discontinued Operations - Nautica® Brand
Business and Licensing Business

On April 30, 2018, the company completed the sale of its Nautica®
brand business. On April 28, 2017, the company completed the sale of its
Licensed Sports Group ("LSG") business, including the Majestic®
brand. In conjunction with the LSG divestiture, VF executed its plan to
entirely exit the licensing business and completed the sale of the
assets of the JanSport® brand collegiate
business in the fourth quarter of 2017. Accordingly, the company has
included the operating results of these businesses in discontinued
operations through their respective dates of sale.

Adjusted Amounts - Excluding Williamson-Dickie, Icebreaker®,
Altra
®, Reef®,
and Jeans Spin-Off Transaction and Deal Related Expenses, Costs Related
to Office Relocations and Other Strategic Business Decisions, and the
Provisional Impact of U.S. Tax Legislation

This release refers to adjusted amounts that exclude transaction and
deal related expenses associated with the acquisitions and integration
of Williamson-Dickie, Icebreaker® and Altra®,
and expenses and losses on sale related to the divestitures of the Reef®
brand and the Van Moer business, which was acquired in
connection with the Williamson-Dickie acquisition. The release also
refers to transaction expenses associated with the planned spin-off of
the Jeans business. Total transaction and deal related expenses,
including the losses on sale, were approximately $57 million in the
fourth quarter of fiscal 2019 and $191 million in fiscal 2019.

This release also refers to adjusted amounts that exclude costs
primarily associated with the previously announced relocations of VF's
global headquarters and certain brands to Denver, Colorado. The release
also refers to costs related to strategic business decisions to cease
operations in Argentina and planned business model changes in certain
other countries in South America. Total costs were approximately $61
million in the fourth quarter of fiscal 2019 and $79 million in fiscal
2019.

Adjusted amounts in this release also exclude the provisional amounts
recorded due to recent U.S. tax legislation. On December 22, 2017, the
U.S. government enacted comprehensive tax legislation commonly referred
to as the Tax Cuts and Jobs Act ("Tax Act"). Measurement period
adjustments related to the provisional net charge and subsequent
adjustments related to published Tax Act regulations resulted in a net
expense of approximately $14 million in the fourth quarter of fiscal
2019 and $37 million in fiscal 2019.

Combined, the above net charges negatively impacted earnings per share
by $0.28 during the fourth quarter of fiscal 2019 and $0.64 during
fiscal 2019. All adjusted amounts referenced herein exclude the effects
of these amounts.

Adjusted cash flow from operations reflects the impact of the
cash-related acquisition, divestiture, integration, separation,
relocation and other strategic business decision costs paid in fiscal
2019.

Reconciliations of measures calculated in accordance with GAAP to
adjusted amounts, which are considered non-GAAP measures, are presented
in the supplemental financial information included with this release
that identifies and quantifies all excluded items, and provides
management's view of why this information is useful to investors.

Fourth Quarter Fiscal 2019 Income Statement Review

  • Revenue increased 6 percent (up 9 percent in constant dollars)
    to $3.2 billion, driven by VF's largest brands, international and
    direct-to-consumer businesses, as well as strength from the Active,
    Outdoor and Work segments. Excluding Kontoor Brands, revenue increased
    8 percent (up 12 percent in constant dollars).
  • Gross margin declined 20 basis points to 50.3 percent on a
    reported basis. On an adjusted basis, gross margin increased 30 basis
    points, including a 70 basis point negative impact from Kontoor
    Brands, to 51.1 percent.
  • Operating income on a reported basis was $194 million. On an
    adjusted basis, operating income declined 5 percent to $313 million,
    including a $7 million contribution from acquisitions net of
    divestitures. Excluding Kontoor Brands, adjusted operating income
    increased 3 percent. Operating margin on a reported basis
    declined 420 basis points to 6.0 percent. Adjusted operating margin
    declined 110 basis points, including a 70 basis point negative impact
    from Kontoor Brands, to 9.7 percent.
  • Earnings per share was $0.32 on a reported basis. On an
    adjusted basis, earnings per share declined 10 percent (4
    percent in constant dollars) to $0.60, including a $0.01 contribution
    from acquisitions net of divestitures, and $0.04 per share ($20
    million pretax) of incremental investment relative to the company's
    prior outlook provided on January 18, 2019.

Full Year Fiscal 2019 Income Statement Review

  • Revenue increased 12 percent (up 13 percent in constant
    dollars) to $13.8 billion. Excluding acquisitions net of
    divestitures, revenue increased 7 percent (up 8 percent in constant
    dollars), driven by VF's largest brands, international and
    direct-to-consumer businesses, as well as strength from the Active,
    Outdoor and Work segments. Excluding Kontoor Brands, revenue increased
    16 percent (up 18 percent in constant dollars), or 10 percent (11
    percent in constant dollars), excluding acquisitions net of
    divestitures.
  • Gross margin increased 10 basis points to 50.7 percent on a
    reported basis. On an adjusted basis, gross margin increased 30 basis
    points, including a 10 basis point negative impact from Kontoor
    Brands, to 51.0 percent. Excluding acquisitions net of divestitures,
    adjusted gross margin increased 70 basis points to 51.4 percent.
  • Operating income on a reported basis increased 10 percent to
    $1.7 billion. On an adjusted basis, operating income increased 21
    percent to $1.9 billion, including a $73 million contribution from
    acquisitions net of divestitures. Excluding Kontoor Brands, adjusted
    operating income increased 32 percent. Operating margin on a
    reported basis decreased 30 basis points to 12.1 percent. Adjusted
    operating margin increased 110 basis points, including a 50 basis
    point negative impact from Kontoor Brands, to 13.8 percent.
  • Earnings per share on a reported basis increased 63 percent to
    $3.14. Adjusted earnings per share increased 20 percent (up 22 percent
    in constant dollars) to $3.78, including a $0.15 contribution from
    acquisitions net of divestitures. Relative to the company's original
    outlook provided on May 4, 2018, full year fiscal 2019 earnings per
    share included a $0.13 (about $65 million pretax) impact from
    incremental investments.

Balance Sheet and Cash Flow Highlights

Inventories were up 4 percent compared to March 2018 levels. In fiscal
year 2019, VF's cash flow from operations reached approximately $1.7
billion, or nearly $1.8 billion on an adjusted basis. The company also
returned more than $900 million to shareholders through dividends and
share repurchases.

Adjusted Full Year Fiscal 2020 Outlook

VF's outlook for full year fiscal 2020 is on an adjusted continuing
operations basis unless otherwise noted, excludes Kontoor Brands and
includes the following:

  • Revenue is expected to be in the range of $11.7 billion to
    $11.8 billion, reflecting growth of approximately 5 percent to 6
    percent, or approximately 7 percent to 8 percent on a constant dollar
    basis excluding the impact of acquisitions net of divestitures. By
    segment, revenue for Outdoor is expected to increase
    approximately 4 percent to 5 percent, or approximately 5 percent to 6
    percent on a constant dollar basis, excluding the impact of
    acquisitions; revenue for Active is expected to increase
    approximately 6 percent to 7 percent, or approximately 9 percent to 10
    percent on a constant dollar basis excluding the impact of
    divestitures; and, revenue for Work is expected to increase
    approximately 3 percent to 5 percent, or approximately 4 percent to 6
    percent on a constant dollar basis, excluding the impact of
    divestitures.
  • International revenue is expected to increase approximately 4
    percent to 6 percent, or approximately 7 percent to 9 percent on a
    constant dollar basis, excluding the impact of acquisitions net of
    divestitures. By geographic region, European revenue is expected to
    increase approximately 1 percent to 3 percent, or approximately 5
    percent to 7 percent on a constant dollar basis, excluding the impact
    of acquisitions net of divestitures. In the Asia Pacific region,
    revenue is expected to increase approximately 12 percent to 14
    percent, or approximately 14 percent to 16 percent on a constant
    dollar basis. And, in the Americas (non-U.S.) region, revenue is
    expected to increase approximately 2 percent to 4 percent, or
    approximately 3 percent to 5 percent on a constant dollar basis.
    Revenue growth in the Americas (non-U.S.) region is expected to be
    negatively impacted by approximately 6 percentage points as a result
    of planned strategic business model changes.
  • Direct-to-consumer revenue is expected to increase
    approximately 9 percent to 11 percent, or approximately 10 percent to
    12 percent on a constant dollar basis, including 25 percent growth in
    digital.
  • Adjusted gross margin is expected to approach 54.0 percent,
    which represents an estimated increase of approximately 60 basis
    points.
  • Adjusted operating margin is expected to be 13.7 percent, which
    represents an estimated increase of approximately 60 basis points.
  • Adjusted earnings per share is expected to be in the range of
    $3.30 to $3.35, reflecting estimated growth of approximately 15
    percent to 17 percent, or approximately 17 percent to 19 percent on a
    constant dollar basis, excluding the impact of acquisitions net of
    divestitures.
  • Adjusted cash flow from operations is expected to be at least
    $1.3 billion.
  • Other full year assumptions include an effective tax rate in
    the range of 15 percent to 15.5 percent and capital expenditures of
    just under $400 million.

Dividend Declared

VF's Board of Directors declared a quarterly dividend of $0.51 per
share, payable on June 20, 2019, to shareholders of record on June 10,
2019.

Webcast Information

VF will host its fourth quarter fiscal 2019 conference call beginning at
8:30 a.m. Eastern Time today. The conference call will be broadcast live
via the internet, accessible at ir.vfc.com.
For those unable to listen to the live broadcast, an archived version
will be available at the same location.

Presentation

A presentation on fourth quarter fiscal 2019 results will be available
at ir.vfc.com
beginning at approximately 7:30 a.m. Eastern Time today and will be
archived at the same location.

About VF

VF Corporation (NYSE:VFC) outfits consumers around the world with its
diverse portfolio of iconic lifestyle brands, including Vans®,
The North Face
®, Timberland®,
Wrangler
® and Lee®.
Founded in 1899, VF is one of the world's largest apparel, footwear and
accessories companies with socially and environmentally responsible
operations spanning numerous geographies, product categories and
distribution channels. VF is committed to delivering innovative products
to consumers and creating long-term value for its customers and
shareholders. For more information, visit www.vfc.com.

Forward-looking Statements

Certain statements included in this release and 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 several 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: risks
associated with the proposed spin-off of our Jeanswear business,
including the risk that the spin-off will not be consummated within the
anticipated time period or at all; the risk of disruption to our
business in connection with the proposed spin-off and that we could lose
revenue as a result of such disruption; the risk that the companies
resulting from the spin-off do not realize all of the expected benefits
of the spin-off; the risk that the spin-off will not be tax-free for
U.S. federal income tax purposes; the risk that there will be a loss of
synergies from separating the businesses that could negatively impact
the balance sheet, profit margins or earnings of both businesses; and
the risk that the combined value of the common stock of the two
publicly-traded companies will not be equal to or greater than the value
of VF Corporation common stock had the spin-off not occurred. There are
also risks associated with the relocation of our global headquarters and
a number of brands to the metro Denver area, including the risk of
significant disruption to our operations, the temporary diversion of
management resources and loss of key employees who have substantial
experience and expertise in our business, the risk that we may encounter
difficulties retaining employees who elect to transfer and attracting
new talent in the Denver area to replace our employees who are unwilling
to relocate, the risk that the relocation may involve significant
additional costs to us and that the expected benefits of the move may
not be fully realized. Other risks include 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; fluctuations in the price, availability and quality of raw
materials and contracted products; disruption and volatility in the
global capital and credit markets; VF's response to changing fashion
trends, evolving consumer preferences and changing patterns of consumer
behavior, intense competition from online retailers, manufacturing and
product innovation; increasing pressure on margins; VF's ability to
implement its business strategy; VF's ability to grow its international
and direct-to-consumer businesses; VF's and its vendors' ability to
maintain the strength and security of information technology systems;
the risk that VF's facilities and systems and those of our third-party
service providers may be vulnerable to and unable to anticipate or
detect data security breaches and data or financial loss; VF's ability
to properly collect, use, manage and secure consumer and employee data;
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; VF's ability to execute and integrate acquisitions;
changes in tax laws and liabilities; legal, regulatory, political and
economic risks; the risk of economic uncertainty associated with the
pending exit of the United Kingdom from the European Union ("Brexit") or
any other similar referendums that may be held; 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)
 
 
      Three Months Ended March     %     Twelve Months Ended March     %
2019    

2018 (a)

Change 2019    

2018 (a)

Change
Net revenues $ 3,212,969   $ 3,045,446   6 % $ 13,848,660   $ 12,356,283   12 %
Costs and operating expenses
Cost of goods sold 1,595,431 1,506,335 6 % 6,827,481 6,107,671 12 %
Selling, general and administrative expenses 1,423,154   1,229,046   16 % 5,345,339   4,718,725   13 %
Total costs and operating expenses 3,018,585   2,735,381   10 % 12,172,820   10,826,396   12 %
Operating income 194,384 310,065 (37 )% 1,675,840 1,529,887 10 %
Interest, net (12,181 ) (21,165 ) (42 )% (85,425 ) (86,857 ) (2 )%
Other income (expense), net (6,516 ) 5,233   * (63,011 ) (1,799 ) *
Income from continuing operations before income taxes 175,687 294,133 (40 )% 1,527,404 1,441,231 6 %
Income taxes 46,883   32,969   42 % 268,400   672,134   (60 )%
Income from continuing operations 128,804 261,164 (51 )% 1,259,004 769,097 64 %
Income (loss) from discontinued operations, net of tax   (8,371 ) * 788   (110,544 ) *
Net income $ 128,804   $ 252,793   (49 )% $ 1,259,792   $ 658,553   91 %
Earnings (loss) per common share - basic (b)
Continuing operations $ 0.33 $ 0.66 (51 )% $ 3.19 $ 1.95 64 %
Discontinued operations   (0.02 ) *   (0.28 ) *
Total earnings per common share - basic $ 0.33   $ 0.64   (49 )% $ 3.19   $ 1.67   91 %
Earnings (loss) per common share - diluted (b)
Continuing operations $ 0.32 $ 0.65 (51 )% $ 3.14 $ 1.92 63 %
Discontinued operations   (0.02 ) *   (0.28 ) *
Total earnings per common share - diluted $ 0.32   $ 0.63   (49 )% $ 3.15   $ 1.65   91 %
Weighted average shares outstanding
Basic 395,405 395,253 395,189 395,038
Diluted 400,731 401,276 400,496 399,888
Cash dividends per common share $ 0.51 $ 0.46 11 % $ 1.94 $ 1.76 10 %
 
* Calculation not meaningful
 

Basis of presentation of condensed consolidated financial statements:
VF operates and reports using a 52/53 week fiscal year. In connection
with the change in fiscal year end to the Saturday closest to March 31
from the Saturday closest to December 31, VF's current fiscal year ran
from April 1, 2018 through March 30, 2019 ("fiscal 2019"). For
presentation purposes herein, all references to periods ended March 2019
relate to the 13-week and 52-week fiscal periods ended March 30, 2019
and all references to periods ended March 2018 relate to the 13-week and
52-week periods ended March 31, 2018.

(a) In the first quarter of fiscal 2019, VF adopted ASU
2017-07, "Compensation - Retirement Benefits (Topic 715): Improving
the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Costs"
and restated the prior periods to
conform to current year presentation. For the three months ended March
2018, operating income decreased and other income (expense), net
increased by $1.3 million. For the twelve months ended March 2018,
operating income increased and other income (expense), net decreased by
$5.1 million.

(b) Amounts have been calculated using unrounded numbers.

 
VF CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
         
March March
2019 2018
ASSETS
Current assets
Cash and equivalents $ 543,011 $ 680,762
Accounts receivable, net 1,708,796 1,408,587
Inventories 1,943,030 1,861,441
Other current assets 478,620 732,533
Total current assets 4,673,457 4,683,323
Property, plant and equipment 1,057,268 1,011,617
Goodwill and intangible assets 3,779,161 3,813,329
Other assets 846,899 803,041
Total assets $ 10,356,785 $ 10,311,310
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 665,055 $ 1,525,106
Current portion of long-term debt 5,263 6,265
Accounts payable 694,733 583,004
Accrued and other current liabilities 1,296,553 1,024,454
Total current liabilities 2,661,604 3,138,829
Long-term debt 2,115,884 2,212,555
Other liabilities 1,280,781 1,271,830
Total liabilities 6,058,269 6,623,214
Stockholders' equity 4,298,516 3,688,096
Total liabilities and stockholders' equity $ 10,356,785 $ 10,311,310
 

 
VF CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
 
      Twelve Months Ended March

2019 (a)

   

2018 (a)

Operating activities
Net income $ 1,259,792 $ 658,553
Impairment of goodwill 104,651
Depreciation and amortization 301,005 295,597
Other adjustments 103,426   382,798  
Cash provided by operating activities 1,664,223 1,441,599
Investing activities
Business acquisitions, net of cash received (320,405 ) (740,541 )
Proceeds from sale of businesses, net of cash sold 430,286 214,968
Capital expenditures (250,634 ) (183,071 )
Software purchases (56,207 ) (63,809 )
Other, net (23,672 ) 8,549  
Cash used by investing activities (220,632 ) (763,904 )
Financing activities
Net (decrease) increase from short-term borrowings, long-term debt
and other
(872,564 ) 965,311
Purchases of treasury stock (150,676 ) (1,012,341 )
Cash dividends paid (767,061 ) (693,339 )
Proceeds from issuance of Common Stock, net of shares withheld for
taxes
199,296   130,627  
Cash used by financing activities (1,591,005 ) (609,742 )
Effect of foreign currency rate changes on cash, cash equivalents
and restricted cash
14,811   12,957  
Net change in cash, cash equivalents and restricted cash (132,603 ) 80,910
Cash, cash equivalents and restricted cash - beginning of period 689,190   608,280  
Cash, cash equivalents and restricted cash - end of period $ 556,587   $ 689,190  

 

(a) The cash flows related to discontinued operations have
not been segregated, and are included in the Condensed Consolidated
Statements of Cash Flows.

 
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information
(Unaudited)
(In thousands)
 
 
      Three Months Ended March        

% Change
Constant
Currency (a)

   

% Change
Organic (b)

   

% Change
Constant
Currency and
Organic
(a) (b)

2019     2018 % Change
Segment revenues
Outdoor $ 1,001,316 $ 888,039 13 % 17 % 5 % 9 %
Active 1,142,314 1,071,598 7 % 10 % 12 % 16 %
Work 453,001 442,258 2 % 4 % 6 % 7 %
Jeans 597,253 623,266 (4 )% (1 )% (4 )% (1 )%
Other (c) 19,085   20,285   (6 )% (6 )% (6 )% (6 )%
Total segment revenues $ 3,212,969   $ 3,045,446   6 % 9 % 6 % 9 %
 
Segment profit (loss)
Outdoor $ 31,790 $ 44,673 (29 )% (21 )%
Active 232,599 237,620 (2 )% 1 %
Work 45,018 40,024 12 % 13 %
Jeans 47,991 103,805 (54 )% (65 )%
Other (c) (2,091 ) (3,074 ) 32 % 32 %
Total segment profit 355,307 423,048 (16 )% (16 )%
Corporate and other expenses (167,439 ) (107,750 ) 55 % 56 %
Interest, net (12,181 ) (21,165 ) (42 )% (42 )%

Income from continuing operations before income taxes

$ 175,687   $ 294,133   (40 )% (41 )%
 

The business segment information provided above reflects changes in VF's
operating structure during the first quarter of fiscal 2019. These
changes have been made to all periods presented and had no impact on
VF's consolidated results of operations.

(a) Refer to constant currency definition on the following
pages.

(b) Excludes acquisitions representing the operating results
of Icebreaker® and Altra®
for the three months ended March 2019. The change also excludes
divestitures representing the operating results of Reef®
and the Van Moer business for the three months ended March 2018. Refer
to Non-GAAP financial information on "Reconciliation of Select Non-GAAP
Measures - Three and Twelve Months Ended March 2019" and "Reconciliation
of Select Non-GAAP Measures - Three and Twelve Months Ended March 2018"
pages for additional information.

(c) Other is included for purposes of reconciliation of
revenues and profit, but it is not considered a reportable segment.
Includes sales of non-VF products at VF Outlet stores
and results from transition services related to the sale of the Nautica®
and Reef® brand businesses.

 
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information
(Unaudited)
(In thousands)
 
 
      Twelve Months Ended March        

% Change
Constant
Currency (a)

   

% Change
Organic (b)

   

% Change
Constant
Currency and
Organic
(a) (b)

2019     2018 % Change
Segment revenues
Outdoor $ 4,649,024

$

4,261,945

9 % 10 % 4 % 5 %
Active 4,721,792

4,054,487

16 % 18 % 18 % 19 %
Work 1,862,017

1,342,004

39 % 39 % 6 % 6 %
Jeans 2,491,769

2,586,559

(4 )% (2 )% (4 )% (2 )%
Other (c)   124,058    

111,288

  11 % 11 % 11 % 11 %
Total segment revenues $ 13,848,660  

$

12,356,283

  12 % 13 % 7 % 8 %
 
Segment profit (loss)
Outdoor $ 544,425

$

508,760

7 % 9 %
Active 1,125,709

894,212

26 % 27 %
Work 220,670

165,952

33 % 33 %
Jeans 300,502

395,822

(24 )% (28 )%
Other (c)   457    

(3,969

)

* *
Total segment profit 2,191,763

1,960,777

12 % 12 %
Corporate and other expenses

(578,934

)

(432,689

)

34 % 34 %
Interest, net  

(85,425

)

 

(86,857

)

(2 )% (2 )%
Income from continuing operations before income taxes $ 1,527,404  

$

1,441,231

  6 % 6 %
 

The business segment information provided above reflects changes in VF's
operating structure during the first quarter of fiscal 2019. These
changes have been made to all periods presented and had no impact on
VF's consolidated results of operations.

(a) Refer to constant currency definition on the following
pages.

(b) Excludes acquisitions representing the operating results
of Icebreaker® and Altra®
for the twelve months ended March 2019 and the operating results of
Williamson-Dickie for the six months ended September 2018. The change
also excludes divestitures representing the operating results of Reef®
and the Van Moer business, through the respective dates of sale for the
three months ended December 2018, and for the six months ended March
2018. Refer to Non-GAAP financial information on "Reconciliation of
Select Non-GAAP Measures - Three and Twelve Months Ended March 2019" and
"Reconciliation of Select Non-GAAP Measures - Three and Twelve Months
Ended March 2018" pages for additional information.

(c) Other is included for purposes of reconciliation of
revenues and profit, but it is not considered a reportable segment.
Includes sales of non-VF products at VF Outlet stores
and results from transition services related to the sale of the Nautica®
and Reef® brand businesses.

* Calculation not meaningful

 
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
 
 
      Three Months Ended March 2019
As Reported     Adjust for Foreign    
under GAAP Currency Exchange Constant Currency
Segment revenues
Outdoor

$

1,001,316

$

36,902

$

1,038,218

Active 1,142,314 40,736 1,183,050
Work 453,001 5,219 458,220
Jeans 597,253 18,614 615,867
Other   19,085    

    19,085  
Total segment revenues

$

3,212,969

 

$

101,471

 

$

3,314,440

 
Segment profit (loss)
Outdoor

$

31,790

$

3,528

$

35,318

Active 232,599 7,623 240,222
Work 45,018 387 45,405
Jeans 47,991 (11,914

)

36,077
Other  

(2,091

)

 

   

(2,091

)

Total segment profit 355,307 (376 354,931
Corporate and other expenses (167,439

)

(474

)

(167,913

)

Interest, net   (12,181

)

 

   

(12,181

)

Income from continuing operations before income taxes

$

175,687

 

$

(850

)

$

174,837

 
Diluted earnings per share growth  

(51

)%

 

(50

)%

 

(101

)%

 

Constant Currency 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 for its foreign revenues
and expenses in U.S. dollars. These rate fluctuations can have a
significant effect on reported operating results. As a supplement to our
reported operating results, we present constant currency financial
information, which is a non-GAAP financial measure that excludes the
impact of translating foreign currencies into U.S. dollars and on
foreign currency-denominated transactions in countries with highly
inflationary economies. We use constant currency 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 measuring foreign currency transactions in highly inflationary
economies. 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 constant currency 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, foreign currency transactions in
highly inflationary economies, on a constant currency basis, are
calculated using exchange rates from the comparable period of the prior
year.

These constant currency 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 constant
currency information presented may not be comparable to similarly titled
measures reported by other companies.

 
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
 
 
      Twelve Months Ended March 2019
As Reported     Adjust for Foreign    
under GAAP Currency Exchange Constant Currency
Segment revenues
Outdoor

$

4,649,024

$

59,504

$

4,708,528

Active 4,721,792 44,341 4,766,133
Work 1,862,017 6,685 1,868,702
Jeans 2,491,769 43,403 2,535,172
Other   124,058         124,058  
Total segment revenues

$

13,848,660

 

$

153,933

 

$

14,002,593

 
Segment profit (loss)
Outdoor

$

544,425

$

12,623

$

557,048

Active 1,125,709 6,200 1,131,909
Work 220,670 600 221,270
Jeans 300,502

(14,022

)

286,480
Other   457    

   

457

 
Total segment profit 2,191,763 5,401 2,197,164
Corporate and other expenses

(578,934

)

(590

)

(579,524

)

Interest, net  

(85,425

)

     

(85,425

)

Income from continuing operations before income taxes

$

1,527,404

 

$

4,811

 

$

1,532,215

 
Diluted earnings per share growth  

63

%

 

1

%

 

64

%

 

Constant Currency 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 for its foreign revenues
and expenses in U.S. dollars. These rate fluctuations can have a
significant effect on reported operating results. As a supplement to our
reported operating results, we present constant currency financial
information, which is a non-GAAP financial measure that excludes the
impact of translating foreign currencies into U.S. dollars and on
foreign currency-denominated transactions in countries with highly
inflationary economies. We use constant currency 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 measuring foreign currency transactions in highly inflationary
economies. 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 constant currency 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, foreign currency transactions in
highly inflationary economies, on a constant currency basis, are
calculated using exchange rates from the comparable period of the prior
year.

These constant currency 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 constant
currency information presented may not be comparable to similarly titled
measures reported by other companies.

 

VF CORPORATION

Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Twelve Months Ended March 2019
(Unaudited)
(In thousands, except per share amounts)
                                 
 
Three Months Ended March 2019

As Reported
under GAAP

Transaction
and Deal
Related
Costs
(a)

Relocation and
Other Strategic
Business
Costs
(b)

Impact
of Tax
Act (c)

Adjusted

Contribution
from
Acquisitions (d)

Contribution
from
Divestitures (e)

Adjusted
Organic

Revenues

$

3,212,969

$

$

$

$

3,212,969

$

(66,439

)

$

$

3,146,530

 
Gross profit 1,617,538 8,722 14,125

1,640,385

(32,982

)

1,607,403

Percent

50.3

%

 

 

51.1

%

51.1

%

 

Operating income 194,384 56,923 61,257

312,564

(7,099

)

305,465

Percent

6.0

%

 

9.7

%

9.7

%

 
Other income (expense), net

(6,516

)

160

(6,356

)

6

(6,350

)

 
Diluted earnings per share from continuing operations (f) 0.32 0.11 0.13

0.03

0.60

(0.01

)

0.59

 
Twelve Months Ended March 2019

As Reported
under GAAP

Transaction
and Deal
Related
Costs
(a)

Relocation and
Other Strategic
Business
Costs
(b)

Impact
of Tax
Act (c)

Adjusted

Contribution
from
Acquisitions (d)

Contribution
from
Divestitures (e)

Adjusted
Organic

Revenues

$

13,848,660

$

$

$

$

13,848,660

$

(696,353

)

$

(3,855

)

$

13,148,452

 
Gross profit 7,021,179 28,307 17,637

7,067,123

(308,816

)

(1,322

)

6,756,985

Percent

50.7

%

 

51.0

%

51.4

%

 
Operating income 1,675,840 153,719 78,928

1,908,487

(73,849

)

857

1,835,495

Percent

12.1

%

 

13.8

%

14.0

%

 

Other income (expense), net

(63,011

)

37,012

(25,999

)

138

1

(25,860

)

 

 

Diluted earnings per share from continuing operations (f) 3.14 0.38 0.17

0.09

3.78

(0.15

)

3.64

 

(a) Transaction and deal related costs include acquisition
and integration costs related to the acquisitions of Williamson-Dickie
and the Icebreaker® and Altra®
brands, and divestiture costs related to the sale of the Reef®
brand, which totaled $8.3 million and $41.9 million for the three and
twelve months ended March 2019, respectively. The costs also include
separation and related expenses associated with the planned spin-off of
the Jeans business of $48.7 million and $111.5 million for the three and
twelve months ended March 2019, respectively. Additionally, the costs
include non-operating losses on sale related to the divestitures of the Reef®
brand and Van Moer business, totaling $36.8 million in the twelve
months ended March 2019. The transaction and deal related costs resulted
in a net tax benefit of $13.4 million and $39.7 million in the three and
twelve months ended March 2019, respectively.

(b) Relocation and other strategic business costs for the
three and twelve months ended March 2019 include costs associated with
the relocation of VF's global headquarters and certain brands to Denver,
Colorado, which totaled $30.7 million and $47.4 million for the three
and twelve months ended March 2019, respectively. The costs also include
those related to strategic business decisions to cease operations in
Argentina and planned business model changes in certain other countries
in South America, which totaled $30.5 million and $31.5 million for the
three and twelve months ended March 2019, respectively. The relocation
and other strategic business costs resulted in a net tax benefit of $7.9
million and $12.2 million for the three and twelve months ended March
2019, respectively.

(c) On December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cuts and
Jobs Act ("Tax Act"). Measurement period adjustments related to the
provisional net charge and subsequent adjustments related to published
Tax Act regulations were recorded during the three and twelve months
ended March 2019, resulting in net tax expense of $13.9 million and
$37.2 million, respectively.

(d) The contribution from acquisitions represents the
operating results of Williamson-Dickie through the one-year anniversary
of the acquisition, the operating results of Icebreaker®
beginning on the acquisition date of April 3, 2018 and the operating
results of Altra® beginning on the acquisition
date of June 1, 2018. The operating results of all acquisitions exclude
transaction and deal related costs. The contribution from acquisitions
resulted in tax expense of $2.1 million and $15.6 million for the three
and twelve months ended March 2019, respectively.

(e) The contribution from divestitures represents the
operating results of the Reef® brand and
Van Moer business through the respective dates of sale for the three
months ending December 2018. The operating results of all divestitures
exclude transaction and deal related costs. The contribution from
divestitures resulted in a tax benefit of $0.2 million for the twelve
months ended March 2019.

(f) Amounts shown in the table have been calculated using
unrounded numbers. The diluted earnings per share impacts were
calculated using 400,731,000 and 400,496,000 weighted average common
shares for the three and twelve months ended March 2019, respectively.

Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis, on
an adjusted basis, which excludes the impact of transaction and deal
related costs, relocation and other strategic business costs and the
provisional impact of tax reform, and on an adjusted organic basis,
which excludes the operating results of Williamson-Dickie (for the six
months ended September 2018), Icebreaker®,
Altra
®, Reef ® (for the
three months ending December 2018) and the Van Moer business (for the
three months ending December 2018). Contribution from acquisitions and
divestitures also excludes transaction and deal related costs. These
adjusted presentations are non-GAAP measures. Management believes these
measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of VF's
ongoing operations and are useful for period-over-period comparisons of
such operations.

Management uses the above financial measures internally in its budgeting
and review process and, in some cases, as a factor in determining
compensation. While management believes that these non-GAAP financial
measures are useful in evaluating the business, this information should
be considered as supplemental in nature and should be viewed in addition
to, and not in lieu of or superior to, VF's operating performance
measures calculated in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as similarly titled measures
presented by other companies.

 
VF CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Twelve Months Ended March 2018
(Unaudited)
(In thousands, except per share amounts)
                         
 
Three Months Ended March 2018

As Reported
under GAAP

Transaction
and Deal
Related
Costs
(a)

Impact of
Tax Act
(b)

Adjusted

Contribution
from
Divestitures
(c)

Adjusted
Organic

Revenues

$

3,045,446

$ $ $ 3,045,446 $ (66,016 ) $ 2,979,430
 
Gross profit

1,539,111

6,492

1,545,603

(29,694

)

1,515,909

Percent

50.5

%

50.8

%

50.9

%

 
Operating income

310,065

18,605

328,670

(12,827

)

315,843

Percent

10.2

%

10.8

%

10.6

%

 
Diluted earnings per share from continuing operations (d)

0.65

0.03

(0.01

)

0.67

(0.03

)

0.64

 
Twelve Months Ended March 2018

As Reported
under GAAP

Transaction
and Deal
Related
Costs
(a)

Impact of
Tax Act
(b)

Adjusted

Contribution
from
Divestitures
(c)

Adjusted
Organic

Revenues $ 12,356,283 $

$

$

12,356,283

$ (92,854 ) $ 12,263,429
 
Gross profit

6,248,612

10,127

6,258,739

(38,221

)

6,220,518

Percent

50.6

%

50.7

%

50.7

%

 
Operating income

1,529,887

44,470

1,574,357

(10,290

)

1,564,067

Percent

12.4

%

12.7

%

12.8

%

 
Diluted earnings per share from continuing operations (d)

1.92

0.07

1.15

3.14

(0.02

)

3.12

 

(a) Transaction and deal related costs include acquisition
and integration costs related to the acquisition of Williamson-Dickie
and the Icebreaker® and Altra®
brands, additional cost of goods sold recognized by Williamson-Dickie
due to fair value inventory adjustments calculated as part of the
purchase price accounting and a non-operating net benefit from hedging
the purchase price of Icebreaker®. The
transaction and deal related costs resulted in a net tax benefit of $3.3
million and $6.9 million in the three and twelve months ended March
2018, respectively.

(b) On December 22, 2017, the U.S. government enacted the Tax
Act. The transitional impact of the Tax Act resulted in a provisional
net charge of $465.5 million for the three months ended December 2017.
Measurement period adjustments related to the provisional net charge
were recorded during the three months ended March 2018, resulting in a
tax benefit of $5.1 million in the three months ended March 2018 and a
net charge of $460.4 million for the twelve months ended March 2018.

(c) The contribution from divestitures represents the
operating results of the Reef® brand and
Van Moer business for the three and six months ending March 2018. The
contribution from divestitures resulted in a tax expense of $2.1 million
and $1.8 million for the three and twelve months ended March 2018.

(d) Amounts shown in the table have been calculated using
unrounded numbers. The diluted earnings per share impact was calculated
using 401,276,000 and 399,888,000 weighted average common shares for the
three and twelve months ended March 2018, respectively.

Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis, on
an adjusted basis which excludes the provisional impact of tax reform
and transaction and deal related expenses, and on an adjusted organic
basis, which excludes the operating results of Reef ® and
the Van Moer business (for the three and six months ending March 2018).
These adjusted presentations are non-GAAP measures. Management believes
these measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of VF's
ongoing operations and are useful for period-over-period comparisons of
such operations.

Management uses the above financial measures internally in its budgeting
and review process and, in some cases, as a factor in determining
compensation. While management believes that these non-GAAP financial
measures are useful in evaluating the business, this information should
be considered as supplemental in nature and should be viewed in addition
to, and not in lieu of or superior to, VF's operating performance
measures calculated in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as similarly titled measures
presented by other companies.

 
VF CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Twelve Months Ended March 2019, VF Excluding Kontoor Brands
(Unaudited)
(In thousands, except per share amounts)
                             
 
Three Months Ended March 2019

VF Adjusted (a)

Kontoor
Brands
(b)

Kontoor Brands -
Transaction and
Deal Related
Costs,
and Other
Strategic
Business Costs
(c)

Kontoor Brands -
Adjusted

VF Adjusted
Excluding
Kontoor Brands
Adjusted

Contribution from
Acquisitions and
Divestitures
(d)

VF Adjusted
Organic
Excluding
Kontoor Brands
Adjusted

Revenues $ 3,212,969 $ (635,989 ) $ $ (635,989 ) $ 2,576,980 $ (66,439 ) $ 2,510,541
 
Gross profit

1,640,385

(246,113

)

(11,886

)

(257,999

)

1,382,386

(32,982

)

1,349,404

Percent

51.1

%

53.6

%

53.7

%

 
Operating income

312,564

(51,167

)

(31,498

)

(82,665

)

229,899

(7,099

)

222,800

Percent

9.7

%

8.9

%

8.9

%

 

Twelve Months Ended March 2019

VF Adjusted (a)

Kontoor
Brands
(b)

Kontoor Brands -
Transaction and
Deal Related
Costs,
and Other
Strategic
Business Costs
(c)

Kontoor Brands -
Adjusted

VF Adjusted
Excluding
Kontoor Brands
Adjusted

Contribution from
Acquisitions and
Divestitures
(d)

VF Adjusted
Organic
Excluding
Kontoor Brands
Adjusted

Revenues $ 13,848,660 $ (2,676,591 ) $ $ (2,676,591 ) $ 11,172,069 $ (700,208 ) $ 10,471,861
 
Gross profit

7,067,123

(1,082,735

)

(13,160

)

(1,095,895

)

5,971,228

(310,138

)

5,661,090

Percent

51.0

%

53.4

%

54.1

%

 
Operating income

1,908,487

(321,372

)

(54,704

)

(376,076

)

1,532,411

(72,992

)

1,459,419

Percent

13.8

%

13.7

%

13.9

%

 

(a) Excludes the impact of transaction and deal related
costs, relocation and other strategic business costs from VF's reported
gross profit and operating income. Refer to Non-GAAP financial
information on the "Reconciliation of Select Non-GAAP Measures - Three
and Twelve Months Ended March 2019" page for additional information.

(b) Kontoor Brands includes historical results of VF's Jeans
reportable segment, Wrangler® RIGGS brand
(included in the Work reportable segment) and VF Outlet
business (included in the Other category presented in the reconciliation
of reportable segment results). The results shown above are not
indicative of the results for Kontoor Brands as a standalone entity or
VF's discontinued operations view of consolidated results after the
separation of Kontoor Brands is complete.

(c) Costs include separation and related expenses associated
with the planned spin-off of the Jeans business and costs related to
strategic business decisions to cease operations in Argentina that were
recorded by the Jeans business.

(d) The contribution from acquisitions represents the
operating results of Williamson-Dickie through the one-year anniversary
of the acquisition, the operating results of Icebreaker®
beginning on the acquisition date of April 3, 2018 and the operating
results of Altra® beginning on the acquisition date of
June 1, 2018. The contribution from divestitures represents the
operating results of the Reef® brand and
Van Moer business through the respective dates of sale for the three
months ending December 2018. The operating results of all acquisitions
and divestitures exclude transaction and deal related costs. Refer to
Non-GAAP financial information on the "Reconciliation of Select Non-GAAP
Measures - Three and Twelve Months Ended March 2019" page for additional
information.

Non-GAAP Financial Information

The financial information above has been presented on an adjusted basis,
which excludes the impact of transaction and deal related costs,
relocation and other strategic business costs and the results of Kontoor
Brands, and on an adjusted organic basis, which excludes the operating
results of Williamson-Dickie (for the six months ended September 2018), Icebreaker®,
Altra
®, Reef ® (for the
three months ending December 2018) and the Van Moer business (for the
three months ending December 2018). Contribution from acquisitions and
divestitures also excludes transaction and deal related costs. These
adjusted presentations are non-GAAP measures. Management believes these
measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of VF's
ongoing operations and are useful for period-over-period comparisons of
such operations.

Management uses the above financial measures internally in its budgeting
and review process and, in some cases, as a factor in determining
compensation. While management believes that these non-GAAP financial
measures are useful in evaluating the business, this information should
be considered as supplemental in nature and should be viewed in addition
to, and not in lieu of or superior to, VF's operating performance
measures calculated in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as similarly titled measures
presented by other companies.

 
VF CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Twelve Months Ended March 2018, VF Excluding Kontoor Brands
(Unaudited)
(In thousands, except per share amounts)
                     
 
Three Months Ended March 2018

VF Adjusted (a)

Kontoor
Brands
(b)

VF Adjusted
Excluding
Kontoor Brands

Contribution from
Divestitures
(c)

VF Adjusted Organic
Excluding Kontoor
Brands

Revenues $ 3,045,446 $ (659,832 ) $ 2,385,614 $ (66,016 ) 2,319,598
 
Gross profit

1,545,603

(290,779

)

1,254,824

(29,694

)

1,225,130
Percent

50.8

%

52.6

%

52.8

%
 
Operating income

328,670

(106,265

)

222,405

(12,827

)

209,578
Percent

10.8

%

9.3

%

9.0

%

 
Twelve Months Ended March 2018

VF Adjusted (a)

Kontoor
Brands
(b)

VF Adjusted
Excluding
Kontoor Brands

Contribution from
Divestitures
(c)

VF Adjusted Organic
Excluding Kontoor
Brands

Revenues $ 12,356,283 $ (2,762,879 ) $ 9,593,404 $ (92,854 ) 9,500,550
 
Gross profit

6,258,739

(1,170,176

)

5,088,563

(38,221

)

5,050,342
Percent

50.7

%

53.0

%

53.2

%
 
Operating income

1,574,357

(410,363

)

1,163,994

(10,290

)

1,153,704
Percent

12.7

%

12.1

%

12.1

%
 

(a) Excludes the impact of transaction and deal related
costs, relocation and other strategic business costs from VF's reported
gross profit and operating income. Refer to Non-GAAP financial
information on the "Reconciliation of Select Non-GAAP Measures - Three
and Twelve Months Ended March 2018" page for additional information.

(b) Kontoor Brands includes historical results of VF's Jeans
reportable segment, Wrangler® RIGGS brand
(included in the Work reportable segment) and VF Outlet
business (included in the Other category presented in the reconciliation
of reportable segment results). The results shown above are not
indicative of the results for Kontoor Brands as a standalone entity or
VF's discontinued operations view of consolidated results after the
separation of Kontoor Brands is complete. Note: there were no
adjustments to Kontoor Brands in the three or twelve months ended March
2018.

(c) The contribution from divestitures represents the
operating results of the Reef® brand and
Van Moer business for the three and six months ending March 2018. Refer
to Non-GAAP financial information on the "Reconciliation of Select
Non-GAAP Measures - Three and Twelve Months Ended March 2018" page for
additional information.

Non-GAAP Financial Information

The financial information above has been presented on an adjusted basis
which excludes transaction and deal related expenses and the results of
Kontoor Brands, and on an adjusted organic basis, which excludes the
operating results of Reef ® and the Van Moer
business (for the three and six months ending March 2018). These
adjusted presentations are non-GAAP measures. Management believes these
measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of VF's
ongoing operations and are useful for period-over-period comparisons of
such operations.

Management uses the above financial measures internally in its budgeting
and review process and, in some cases, as a factor in determining
compensation. While management believes that these non-GAAP financial
measures are useful in evaluating the business, this information should
be considered as supplemental in nature and should be viewed in addition
to, and not in lieu of or superior to, VF's operating performance
measures calculated in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as similarly titled measures
presented by other companies.

 
VF CORPORATION
Supplemental Financial Information
Top 5 Brand Revenue Information
(Unaudited)
                                 
 
Three Months Ended March 2019 Twelve Months Ended March 2019
Top 5 Brand Revenue Growth Americas EMEA APAC Global Americas EMEA APAC Global
Vans®

    % change

21 % 2 % 8 % 14 % 30 % 10 % 25 % 24 %

    % change constant currency*

22 % 10 % 13 % 18 % 30 % 12 % 26 % 26 %
The North Face®

    % change

10 % 5 % 8 % 8 % 8 % 11 % 13 % 9 %

    % change constant currency*

10 % 14 % 13 % 11 % 8 % 14 % 16 % 10 %
Timberland®

    % change

6 % (3 )% 2 % 1 % 4 % (2 )% (2 )% 0 %

    % change constant currency*

7 % 5 % 6 % 6 % 4 % 0 % 0 % 2 %
Wrangler®

    % change

3 % (11 )% (9 )% 0 % 1 % (9 )% (8 )% (1 )%

    % change constant currency*

4 % (3 )% 0 % 3 % 2 % (6 )% (1 )% 1 %
Lee®

    % change

(7 )% (18 )% (1 )% (8 )% (8 )% (9 )% 0 % (7 )%

    % change constant currency*

(6 )% (11 )% 5 % (4 )% (7 )% (6 )% 3 % (5 )%
 
*Refer to constant currency definition on previous pages.
 

 
VF CORPORATION
Supplemental Financial Information
Geographic and Channel Revenue Information
(Unaudited)
         
 
Three Months Ended March 2019 Twelve Months Ended March 2019
% Change    

% Change
Constant
Currency*

   

% Change
Organic (a)

   

% Change
Constant
Currency and
Organic*(a)

% Change    

% Change
Constant
Currency*

   

% Change
Organic (a)

   

% Change
Constant
Currency and
Organic*(a)

Geographic Revenue Growth
U.S. 8 % 8 % 8 % 8 % 13% 13 % 9 % 9 %
EMEA (1 )% 8 % 0 % 8 % 8% 10 % 4 % 6 %
APAC 6 % 11 % 4 % 9 % 15% 17 % 8 % 10 %
China 14 % 20 % 14 % 20 % 22% 24 % 17 % 20 %
Americas (non-U.S.) 13 % 21 % 11 % 19 % 14% 21 % 4 % 11 %
International 3 % 10 % 2 % 10 % 10% 13 % 5 % 8 %
Global 6 % 9 % 6 % 9 % 12% 13 % 7 % 8 %
 
 
Three Months Ended March 2019 Twelve Months Ended March 2019
% Change

% Change
Constant
Currency*

% Change
Organic (a)

% Change
Constant
Currency and
Organic*(a)

% Change

% Change
Constant
Currency*

% Change
Organic (a)

% Change
Constant
Currency and
Organic*(a)

Channel Revenue Growth
Wholesale (b) 5 % 8 % 5 % 9 % 11% 13 % 6 % 7 %
Direct-to-Consumer 8 % 11 % 6 % 9 % 14% 15 % 11 % 12 %
Digital 21 % 24 % 17 % 20 % 32% 33 % 24 % 25 %
 
As of March

2019 (c)

2018
DTC Store Count
Total 1,551 1,483
 
*Refer to constant currency definition on previous pages.

 

(a) Excludes acquisitions representing the operating results
of Icebreaker® and Altra®
for the three and twelve months ended March 2019 and the operating
results of Williamson-Dickie for the six months ended September 2018.
The change also excludes divestitures representing the operating results
of Reef® and the Van Moer business, through the
respective dates of sale for the three months ended December 2018, and
for the three and six months ended March 2018. Refer to Non-GAAP
financial information on "Reconciliation of Select Non-GAAP Measures -
Three and Twelve Months Ended March 2019" and "Reconciliation of Select
Non-GAAP Measures - Three and Twelve Months Ended March 2018" pages for
additional information.

(b) Royalty revenues are included in the wholesale channel
for all periods.

(c) The March 2019 DTC store count includes 34 Icebreaker®
and Altra® stores.

 
VF CORPORATION
Supplemental Financial Information
Geographic and Channel Revenue Information, VF Excluding Kontoor
Brands
(Unaudited)
         
 
Three Months Ended March 2019 Twelve Months Ended March 2019
% Change    

% Change
Constant
Currency*

   

% Change
Organic (a)

   

% Change
Constant
Currency and
Organic*(a)

% Change    

% Change
Constant
Currency*

   

% Change
Organic (a)

   

% Change
Constant
Currency and
Organic*(a)

Geographic Revenue Growth (b)

U.S. 11 % 11 % 12 % 12 % 19% 19 % 13 % 13 %
EMEA 2 % 10 % 2 % 10 % 10% 12 % 6 % 8 %
APAC 9 % 13 % 5 % 10 % 19% 20 % 11 % 12 %
China 19 % 25 % 19 % 25 % 29% 31 % 22 % 25 %
Americas (non-U.S.) 18 % 24 % 15 % 22 % 23% 28 % 10 % 16 %
International 5 % 12 % 5 % 12 % 14% 16 % 7 % 10 %
Global 8 % 12 % 8 % 12 % 16% 18 % 10 % 11 %
 
 
Three Months Ended March 2019 Twelve Months Ended March 2019
% Change

% Change
Constant
Currency*

% Change
Organic (a)

% Change
Constant
Currency and
Organic*(a)

% Change

% Change
Constant
Currency*

% Change
Organic (a)

% Change
Constant
Currency and
Organic*(a)

Channel Revenue Growth (b)

Wholesale (c) 7 % 11 % 9 % 13 % 17% 18 % 9 % 10 %
Direct-to-Consumer 9 % 12 % 7 % 10 % 16% 17 % 12 % 13 %
Digital 22 % 26 % 18 % 22 % 34% 35 % 25 % 26 %
 
As of March

2019 (d)

2018

DTC Store Count (e)

Total 1,407 1,337
 
*Refer to constant currency definition on previous pages.

 

(a) Excludes acquisitions representing the operating results
of Icebreaker® and Altra®
for the three and twelve months ended March 2019 and the operating
results of Williamson-Dickie for the six months ended September 2018.
The change also excludes divestitures representing the operating results
of Reef® and the Van Moer business, through the
respective dates of sale for the three months ended December 2018, and
for the three and six months ended March 2018. Refer to Non-GAAP
financial information on "Reconciliation of Select Non-GAAP Measures -
Three and Twelve Months Ended March 2019" and "Reconciliation of Select
Non-GAAP Measures - Three and Twelve Months Ended March 2018" pages for
additional information.

(b) All percentages exclude the historical results of VF's
Jeans reportable segment, Wrangler® RIGGS brand
(included in the Work reportable segment) and VF Outlet
business (included in the Other category presented in the reconciliation
of reportable segment results).

(c) Royalty revenues are included in the wholesale channel
for all periods.

(d) The March 2019 DTC store count includes 34 Icebreaker®
and Altra® stores.

(e) Excludes Wrangler®, Lee®
and VF Outlet stores.

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