North Face 1999 Annual Report Download

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VF CORPORATION
1999 ANNUAL REPORT
VF 20/20
We see the big picture

Table of contents

  • Page 1
    V F C O R P O R AT I O N 1 9 9 9 A N N UA L R E P O RT VF 20/20 We see the big picture

  • Page 2
    ... per share amounts 1999 1998 1997 Summary of Operations Net sales Operating income Net income Return on average common equity F i n a n c i a l Po s i t i o n $5,551,616 652,632 366,242 17.3% $5,478,807 684,169 388,306 19.7% $5,222,246 605,073 350,942 18.2% Working capital Current ratio...

  • Page 3
    ...G P I C T U RE At VF, seeing the big picture means focusing our resources to keep consumers satisfied.W e've done this successfully for more than 100 years - and we're already making progress in the new century. In this annual report, we take a look at how our industry is likely to change over the...

  • Page 4
    We fit

  • Page 5
    your life

  • Page 6
    ..., intimate apparel, workwear, knitwear, playwear, daypacks and swimwear. VF has created an organizational structure to maximize the opportunities among its many brands. Today VF consists of more than two dozen distinct marketing units that form the foundation for its six coalitions - North & South...

  • Page 7
    ..., Josie and Natori intimate apparel. Victoria's Secret, Sears, JCPenney's and Target are among our Private Brands customers. Vanity Fair is a top player in department stores, while Vassarette bras have captured the lead share position in mass market stores. Bestform likewise leads in sports bras in...

  • Page 8
    ..., give us entry into growing markets such as corporate image apparel, protective apparel and hospitality and cleanroom products that offer opportunities for additional sales growth. A number of new business-to-business Internet sites will be launched within Workwear this year as well. VF's Knitwear...

  • Page 9
    ...Authentic U.S. brands have historically driven the European jeans market. In 1999, however, this market declined as consumers moved to twills and other casual styles. But the expansion of hypermarkets and mass merchandise stores in Europe offers new opportunities for jeans and other apparel products...

  • Page 10
    ...sales in 1999. Workwear sales jumped over 30%, as we added three occupational apparel companies - Horace Small, Todd Uniform and Fibrotek - to our portfolio in 1999. We also expanded our presence in Latin America, and acquired UFO, Argentina's leading jeans brand. JanSport also reported record sales...

  • Page 11
    ... of light. The range of products offered within such "basic" categories as jeans, knitwear and intimate apparel continues to expand rapidly. The Internet has created an entirely new medium for people to communicate, shop and conduct business. Today's consumers have more information and more choices...

  • Page 12
    ... softgoods retailers, manufacturers and suppliers to procure goods and services. In Workwear, we're developing a number of new web-based uniform catalogs for government agencies and several major companies. And our Healthtex site allows retail customers to log in, browse our product lines and place...

  • Page 13
    ... will continue to transform our lives. In the apparel industry, it will affect everything from product development through delivery, in imaginable and unimaginable ways. As technology leaders, we decided to look ahead 20 years and envision what our industry might look like. One thing is certain...

  • Page 14
    ... stores to customize product assortments, layouts and point-of-sale communications. The retailer/manufacturer relationship of the future will rely on real time information that drives an interenterprise supply chain. This interaction will enable manufacturers to routinely meet the exact requirements...

  • Page 15
    ...respond instantly to information about labor, fabric, manufacturing and delivery and will direct production to the most appropriate location, anywhere in the world. Inventory management will be a continuous process, offering the capacity to track goods at any point in the product cycle - all the way...

  • Page 16
    ... us as the first apparel manufacturer able to replenish inventory assortments customized by store location. Beginning with information about who shops at which stores, it determines how best to appeal to each type of consumer. It then addresses everything from store layout to merchandising and...

  • Page 17
    FINANCIAL REVIEW Contents Management's Discussion and Analysis 16 Quarterly Results of Operations 20 ...Common Shareholders' Equity 24 Notes to Consolidated Financial Statements 25 Management's Responsibility for Financial Statements 31 Report of Independent Accountants 31 Financial Summary 32 [...

  • Page 18
    ... plans. Information by Business Segment The Consumer Apparel seg- ment consists of jeanswear, women's intimate apparel and swimwear, and children's apparel businesses. Overall, segment sales were relatively ï¬,at in 1999. Record sales in mass market domestic jeanswear sold in the discount...

  • Page 19
    ...Company's knitwear, daypack and backpack businesses. The decline in sales and segment profit over the last two years is due to difficult market conditions existing in the knitwear market. Analysis of Financial Condition In managing its capital structure, VF balances financial leverage with equity...

  • Page 20
    ... of its suppliers and customers. The total cost of resolving the Year 2000 issues, including internal personnel and outside vendors and consultants, was $26 million over the period 1997 through 1999, which was expensed as incurred. Risk Management The Company is exposed to a variety of market risks...

  • Page 21
    ...the U.S. dollar. The Company does not hedge these net investments and does not hedge the translation of foreign currency operating results into the U.S. dollar. In addition, a growing percentage of the total product needs to support our domestic businesses are manufactured in Company-owned plants in...

  • Page 22
    ...In thousands, except per share amounts Net Sales Gross Profit Net Income Earnings Per Common Share Basic Diluted Dividends Per Common Share 1999 First quarter Second quarter Third...$5,222,246 Ten Years of Growth Dollars in millions 6,000 5,000 Net sales Gross profit Net income 4,000 3,000...

  • Page 23
    ...76 2.70 .77 Cost of products sold Marketing, administrative and general expenses Other operating expense, net Operating Income Other Income (Expense) Interest income Interest expense Miscellaneous, net Income Before Income Taxes Income Taxes Net Income Earnings Per Common Share Basic Diluted Cash...

  • Page 24
    ... January 1, 2000 January 2, 1999 Assets Current Assets Cash and equivalents Accounts receivable, less allowances of $54,477 in 1999 and $52,011 in 1998 Inventories Deferred income taxes Other current assets Total current assets Property, Plant and Equipment Intangible Assets Other Assets $ 79...

  • Page 25
    ...(1,253) (391,651) (100,141) 64,964 1,983 (417,353) (5,991) (146,535) 270,629 $ 124,094 Capital expenditures Business acquisitions Other, net Cash invested Financing Increase in short-term borrowings Proceeds from long-term debt Payment of long-term debt Purchase of Common Stock Cash dividends paid...

  • Page 26
    ... Stock Purchase of treasury shares Exercise of stock options, net of shares surrendered Restricted Common Stock Common Stock held in trust for deferred compensation plans Foreign currency translation, net of $5,638 deferred income taxes Balance January 2,1999 Net income Cash dividends: Common Stock...

  • Page 27
    ... represent the excess of costs over the fair value of net tangible assets of businesses acquired, less accumulated amortization of $270.5 million and $243.5 million in 1999 and 1998. These assets are amortized on the straight-line method over 10 to 40 years. The Company's policy is to evaluate...

  • Page 28
    ... valuation date, plus the funded status at the end of each year: In thousands Fair value of plan assets, beginning of year Actual return on plan assets Company contributions Benefits paid Fair value of plan assets, end of year Benefit obligations, beginning of year Service cost Interest cost Plan...

  • Page 29
    ... to participating employees' accounts. Note L Stock Option Plan The Company has granted nonqualified stock options to officers, directors and key employees under a stock compensation plan at prices not less than fair market value on the date of grant. Options become exercisable one year after the...

  • Page 30
    ... market value of shares at the date of grant is amortized to expense over the vesting period. Expense for these shares was $.3 million in 1999 and $.2 million in 1998 and 1997. In 1999, the Company granted stock awards to certain key employees under a new stock award plan, which replaced a portion...

  • Page 31
    ... years' tax examinations. Note N Business Segment Information The Company designs and manufactures apparel products marketed primarily under Company-owned brand names. Customers are primarily department, discount and specialty stores throughout the world. The Company manages its businesses through...

  • Page 32
    ... based on quoted market prices or values of comparable borrowings. The fair value of the Series B Preferred Stock is based on a valuation by an independent financial consulting firm. The Company enters into short-term foreign currency forward exchange contracts to manage exposures related to speci...

  • Page 33
    ...We believe the statements accurately report the financial position and operating results of the Company, on a basis consistent with generally accepted accounting principles and management's best estimates and judgments. Other financial information in this report is consistent with these financial...

  • Page 34
    ...Working capital Current ratio Debt to capital ratio 2 Dividends Purchase of Common Stock Cash provided by operations Capital expenditures (excluding acquisitions) Depreciation and amortization Market Data $ $ $ $ Market price range 1 Book value per common share1 Price earnings ratio - high-low...

  • Page 35
    1995 1994 1993 1992 1991 1990 1989 $ 5,062,299 3,577,555 1,484,744 1,137,354 347,390 (66,217) 2,962 284,135 126,844 $ 157,291 $ 1.20 1.19 .69 127,486 8.8% 4.4% $4,971,713 3,387,295 1,584,418 1,053,912 530,506 (70,984) (3,861) 455,661 181,125 $ 274,536 $ 2.10 2.05 .65 129,240 16.8% 7.9% $4,...

  • Page 36
    ... Officer First Union Corporation Charlotte, North Carolina (Banking) Director since 1992, age 58 Ursula F. Fairbairn 1,3,6 Executive Vice President - Human Resources & Quality American Express Company New York, New York (Financial services company) Director since 1994, age 57 Robert J. Hurst...

  • Page 37
    ... and Secretary; Bob Shearer, VP, Finance and Chief Financial Officer, Tim Lambeth, VP, Global Processes; Mackey McDonald, Chairman, President and Chief Executive Officer; Peter Keene, VP, Controller; Susan Williams, VP, Human Resources; Terry Lay, VP and Chairman, International Coalition. [35]

  • Page 38
    ... Stock Price Information First Chicago Trust Company of New York, a Division of EquiServe Mail Suite 4694, P.O. Box 2536 Jersey City, New Jersey 07303-2536 Telephone Response Center: (201) 324-1225 IndependentAccountants The high and low sales prices for the periods indicated were as follows: 1999...

  • Page 39
    ...VF Values in Action: Corporate Citizenship Around the World Every VF brand is backed by the integrity of our associates and the communities they call home. In August 1999, we celebrated our centennial year on Global VF Day, which spanned 300 communities worldwide and reached 73,000 employees. Aside...

  • Page 40
    ..., Horace Small Professional Apparel, Uniform Solutions) VF Knitwear Walker Road P.O. Box 5423 Martinsville, Virginia 24115 (Lee Sport, Chase Authentics, CSA) VF Playwear 7800 Airport Center Drive Greensboro, North Carolina 27409 (Healthtex, Lee Infant and Toddler, Nike Kids*) VF International Dr...