North Face 2004 Annual Report Download

Download and view the complete annual report

Please find the complete 2004 North Face annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 58

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58

L I VI N G T H E B R A N D VF Corporation 2004 Annual Report

Table of contents

  • Page 1
    L I VI N G T H E B R A N D VF Corporation 2004 Annual Report

  • Page 2
    ... effect of a change in accounting policy in 2002. See details in the accompanying consolidated financial statements. Sales Account Executive, Wrangler & Lee Brands Canada A Banner Year: 2004 was definitely the most energizing year in my 25-year career. The success of Lee in Canada has been...

  • Page 3
    ... Achieved Goal: O ur store exceeded its targets for 2004 by 30%. Result: We have built a loyal customer base and shoppers tell us that the Lee store is their favorite store for denim. Reason for Success: We set ourselves apart from the competition by providing an exceptionally high level of service.

  • Page 4
    ...division, which added around $40 million to sales in 2004. Next M ove: In 2005 we're launching a complete Eastpak® branded apparel collection. It should become a major growth engine for us. ( L ) Senior Graphic Designer, Vans Apparel Greatest Strength: Being able to manage multiple classifications...

  • Page 5
    ...screeners in just six months. Creative Director, JanSport Custom Products M adness: Finding crazy new ways to inspire my team to take risks. M ethod: Making sure individual contribution is always recognized in the "success story." Result: O ur graphic designs helped to further establish JanSport as...

  • Page 6
    VF C O R P O R AT I O N 2004 Annual Report 09 9 "O ur new women' s and kid' s lines, along with strong growth in France, Germany and Benelux, grew our brand sales by 15% in 2004." In memory of Sandy K. Kurilchyk 1948 - 2005. Sales & M arketing Director, Napapijri M ost Important M ission: ...

  • Page 7
    ... What Makes Her Day: Working with an enthusiastic team that thinks outside of traditional comfort zones. What Her Work Has Wrought: Sales of Riggs Workwear™ by Wrangler® apparel grew 71% in 2004. J E F F I S O M M erchandise M anager, Outdoor Brands, VF Jeanswear Brand Aid: My job is to protect...

  • Page 8
    VF C O R P O R AT I O N 2004 Annual Report 13 "We're building a distribution network that includes every country in Europe." "Learn, plan, do." VP, General M anager, Nautica Europe Immediate Goal: To create a motivated and efficient team to bring success in Europe for this great American brand....

  • Page 9
    ... R AT I O N 2004 Annual Report 15 "The difference between winning and losing is having the right team.'' Director of M erchandising, Bestform & Curvation, VF Intimates How Berna Sees Her Job: A merchandiser is really the hub of a wheel. How Berna T hinks: "W hat if " instead of business as usual...

  • Page 10
    ... the Riders® brand. It has created a new platform for growth for 2005 and beyond. S E E N A C O X Merchandise Manager, Riders Female, VF Jeanswear Rate of Success: We grew sales at a double-digit rate in 2004. Secret of Success: We understand our consumer and spend a lot of time listening to her...

  • Page 11
    ... business nearly doubled in 2004." "Kipling brand sales grew by more than 20% within our existing accounts." M ajor League Baseball Brand M anager, Licensed Apparel, VF Imagewear Relationship to Management: There' s a true open-door policy from senior management that' s rare in the corporate world...

  • Page 12
    ... products. A Leg Up: Sales of our Vanity Fair® pants business grew by more than 20% in 2004. ( L ) Director of Advertising & Public Relations, Lee Jeans Now Hear T his: I believe Lee® is the best brand and I work hard every day to let anyone and everyone know it! Watch T his: O ur marketing...

  • Page 13
    ... AT I O N 2004 Annual Report 23 "We beat our sales plan in 2004!" "My job is intimately linked to my passions - ultramarathons, skiing, climbing, windsurfing and cycling." C R A I G E R R I N G T O N ( L ) Director of Advertising, PR & Special Events, M ass M arket, VF Jeanswear Career Obsession...

  • Page 14
    ... grew by 80%. J O H N N Y H A W T H O R N E Sales Director, T he North Face Footwear M ost Novel Part of the Job: Teaching non-footwear people the footwear business. Why We're a Step Ahead: We're providing technically superior products. Best Practices: Providing the sales team powerful tools, then...

  • Page 15
    ...per share. Sales benefited from growth across most of our core businesses, plus the addition of three terrific new brands: Vans® , Napapijri ® and Kipling® . "Be open to change - it' s another word for innovation." M AC K E Y J2 M C D O N A L D Chairman, President and Chief Executive Officer

  • Page 16
    ... international markets. front for our O utdoor team, with the addition of three companies that had total annualized sales of $489 million at the time of purchase. Based in Southern California, Vans® is an authentic action sports shoe brand. Napapijri ® is a premium European outdoor apparel brand...

  • Page 17
    ... working to exploit the growth potential of our new businesses while taking advantage of our great systems and processes to improve their profitability. We'll continue to scan the market for additional brands that meet our strategic and financial criteria - while prudently managing our balance sheet...

  • Page 18
    ..., innovation and value. O ur jeans business had a good year in 2004. Sales were about even with prior year levels, but profitability improved nicely. We have our share of challenges - retail consolidation, pricing pressure, the rise of specialty brands and private label programs - but our...

  • Page 19
    ... to build our brands while also providing us with an important channel of distribution. They also account for as much as 40% of our sales in some markets, such as Argentina. In 2004, we opened 7 new stores, bringing the total number of company-owned stores in the region to 42, with more planned for...

  • Page 20
    ... team is focused on gaining market share, rolling out innovative new sales formats and transforming its supply chain to drive higher profitability. Looking forward, we're expanding and extending our biggest brands, building our business in Canada, Mexico and Western Europe and exploring new markets...

  • Page 21
    ...premium outdoor lifestyle apparel. We're leveraging their great design talent to enable additional growth for The North Face® brand in Europe and to assist in the European launch of our Nautica® brand. The mission for our new Kipling® brand is to be the best women' s casual bag brand in the world...

  • Page 22
    ...did our uniform business. In fact, our flagship Red Kap® brand had its strongest year since 2000. The industry continues to consolidate, but our position has never been stronger. Horace Small ®, a leader in the public safety arena, has teamed with The North Face® brand to provide products such as...

  • Page 23
    ... old world craftsmanship. Comprised of tailored clothing, sportswear, leather accessories and footwear, the collection is sold through upscale department and specialty stores, as well as through four John Varvatos® retail locations. The brand grew rapidly in 2004, and we expect another strong year...

  • Page 24
    VF C O R P O R AT I O N 2004 Annual Report 45 @F R O M L E F T T O R I GH T , SE AT E D ¡ R O B E R T K¢ SH E A R E R VP, Finance and Global Processes and Chief Financial Officer J O H N P . S C H A M B E R G E R VP and Chairman,Cross Coalition M anagement E R I C C ¢ W I S E M A N VP and ...

  • Page 25
    ... next five years to help fuel that growth. s Discussion and Analysis 68 Management ' s Report on C O N T E N T S : 47 Management' Internal Control O ver Financial Reporting 68 Report of Independent Registered Public Accounting Firm 70 Consolidated Balance Sheets 71 Consolidated Statements of Income...

  • Page 26
    ... results of operations and financial condition overview VF Corporation ("VF") is a leading marketer of apparel in the United States and in many international markets. Management's vision is to grow VF by building leading lifestyle brands that excite consumers around the world. VF owns a diversified...

  • Page 27
    ...market share and leverage new business opportunities with these successful retailers. 3. Stretch our brands and customers to new geographies. reduction initiatives that will assist VF in meeting its long-term sales and earnings targets. This spending was not originally planned for 2004. • We sold...

  • Page 28
    ..., VF acquired a controlling interest in a newly formed intimate apparel marketing company in Mexico to expand our presence in that growing market. The total cost of these acquisitions was $667.5 million in cash. These acquisitions added $303.0 million to sales and $0.14 to earnings per share in 2004...

  • Page 29
    ...We added four new executive positions, and will be adding supporting staff positions, dedicated to working more closely with our major customers, driving increased strategic planning for brand development and pursuing targeted acquisition efforts. We include cooperative advertising, retail store and...

  • Page 30
    ...in 2004, with unit volume growth in our private label business resulting from new programs sold to a major private label customer and unit growth in our mass market Vassarette® and Curvation® brands. Domestic intimate apparel sales in 2003 were flat in the department store and mass market channels...

  • Page 31
    ... grow the other core businesses, including men's jeans, retail and licensing, and (4) exit underperforming businesses. Several management team changes were made to drive the needed changes in the business. The 2004 product lines were returned to the more classic Nautica® brand styling, and we made...

  • Page 32
    ... caused by exercises of stock options. However, the actual number purchased during 2005 may vary depending on funding required to support business acquisition opportunities. Cash dividends totaled $1.05 per common share in 2004, compared with $1.01 in 2003 and $0.97 in 2002. Our target is to pay...

  • Page 33
    ... Annual Report 61 In 2002, cash provided by discontinued operations totaled $69.9 million from the sale of the Jantzen business and related assets and from liquidation of working capital from the Jantzen and knitwear businesses. Following is a summary of VF's fixed obligations at the end of 2004...

  • Page 34
    vf corporation 2004 Annual Report 63 stock-based compensation; change in accounting policy effective in 2005 We are currently evaluating FASB Statement No. 123 (R), Share-Based Payment, which was issued in late 2004. This Statement requires that the cost of stock options, based on the fair value ...

  • Page 35
    ..., 2004, VF's domestic defined benefit plans were amended to close the existing plans to new entrants. The amendments did not affect the benefits of current plan participants or their accrual of future benefits. Domestic employees hired after that date, plus employees at recently acquired businesses...

  • Page 36
    ... of the purchase price of the acquired businesses, future changes in these amounts could result in adjustments to Goodwill. Cautionary Statement on Forward-Looking Statements From time to time, we may make oral or written statements, including statements in this Annual Report, that constitute...

  • Page 37
    ... of compliance with the policies or procedures may deteriorate. To the Board of Directors and Stockholders of VF Corporation We have completed an integrated audit of VF Corporation's January 1, 2005 consolidated financial statements and of its internal control over financial reporting as of January...

  • Page 38
    vf corporation 2004 Annual Report 71 consolidated balance shee ts December In thousands, except share amounts 2004 2003 consolidated statements of income Year Ended December In thousands, except per share amounts 2004 $ 6,054,536 $ 2003 5,207,459 $ 2002 5,083,523 assets Current Assets Cash and ...

  • Page 39
    vf corporation 2004 Annual Report 73 consolidated statements of comprehensive income Year Ended December In thousands 2004 $ 474,702 $ 2003 397,933 $ 2002 (154,543) consolidated statements of cash flows Year Ended December In thousands 2004 2003 2002 net income (loss) other comprehensive income ...

  • Page 40
    ... gains on marketable securities Balance, December 2004 See notes to consolidated financial statements. notes to consolidated financial statements december 2004 note a - significant accounting policies Description of Business: VF Corporation ("VF") is a multinational consumer apparel company based...

  • Page 41
    ... directly with consumers include rebate and coupon offers. Allowances are based on customer commitments, specific product circumstances and historical claim rates. Sales at VF-owned and operated retail stores are recognized at the time of purchase of products by consumers. Cost of Goods Sold for VF...

  • Page 42
    ... and stock awards that have not yet vested at the date of adoption. Management is evaluating the effects of this Statement. Derivative Financial Instruments are measured at their fair value and are recognized as Other Current Assets or Accrued Liabilities in the Consolidated Balance Sheets. VF...

  • Page 43
    ... common stock of Vans, Inc. ("Vans") at a price of $20.55 per share, for a total cost of $373.1 million. Vans designs and markets Vans® performance and casual footwear and apparel for skateboarders and other action sports participants and enthusiasts. In its most recent fiscal year, Vans had sales...

  • Page 44
    ...® apparel products. Certain assets of VF Playwear were sold in May 2004 for cash and notes totaling $17.1 million. VF Playwear retained all inventories and other working capital and continued to ship products through the end of the third quarter. Under the sale agreement, VF agreed to purchase $150...

  • Page 45
    vf corporation 2004 Annual Report 85 note f - property, plant and equipment In thousands 2004 $ 52,989 502,369 984,132 1,539,490 $ 2003 52,124 479,725 1,027,997 1,559,846 968,166 $ 591,680 note h - goodwill Activity is summarized by business segment as follows: Outdoor Apparel and Equipment $ 110...

  • Page 46
    vf corporation 2004 Annual Report 87 note j - short-term borrowings Short-term borrowings, all from foreign banks, had a weighted average interest rate of 7.0% at the end of 2004 and at the end of 2003. The Company maintains a $750.0 million unsecured committed revolving bank credit agreement that...

  • Page 47
    ... of acquired businesses Accrual for products sold during the year Repair or replacement costs incurred Currency translation Balance, end of year Less current portion (Note K) Long-term accrual Fair value of plan assets, beginning of year Actual return on plan assets VF contributions Benefits paid...

  • Page 48
    vf corporation 2004 Annual Report 91 September 30 Target Allocation 2004 71% 21 8 100% 2003 61% 31 8 100% Preferred Stock consists of 25,000,000 authorized shares at $1 par value. Series A Preferred Stock: At the end of 2004, 2,000,000 shares are designated as Series A Preferred Stock, of which ...

  • Page 49
    ... restricted stock to officers, key employees and nonemployee members of VF's Board of Directors under a stock compensation plan approved by stockholders. Stock options are granted at prices not less than fair market value on the date of grant. Options become exercisable from one to three years after...

  • Page 50
    vf corporation 2004 Annual Report 95 note q - income taxes The provision for Income Taxes was computed based on the following amounts of Income from Continuing Operations before Income Taxes and Cumulative Effect of a Change in Accounting Policy: In thousands 2004 $ 545,516 166,604 $ 712,120 $ $ ...

  • Page 51
    ... and related products • Outdoor Apparel and Equipment: Outerwear Coalition Profit and Coalition Assets, respectively. VF management evaluates operating performance and makes decisions based on Coalition Sales and Coalition Profit. Accounting policies used for internal management reporting at...

  • Page 52
    ...consolidated sales in 2004, 16.5% in 2003 and 16.2% in 2002. Trade receivables from this customer totaled $93.2 million at the end of 2004 and $75.4 million at the end of 2003. Capital expenditures: Jeanswear Outdoor Apparel and Equipment Intimate Apparel Imagewear Sportswear Other Corporate Total...

  • Page 53
    ...,713 $ 355,905 109,167 The fair value of VF's long-term debt was estimated based on quoted market prices or values of comparable borrowings. The fair value of the Series B Redeemable Preferred Stock was based on a valuation by an independent financial consulting firm. The carrying amounts of cash...

  • Page 54
    ... $ 1.05 note w - subsequent events A subsidiary of VF acquired substantially all of the net assets of Holoubek, Inc., a business having rights to manufacture and market apparel products under license from Harley-Davidson Motor Company, Inc. The purchase price was $26.4 million, with an additional...

  • Page 55
    ... Discontinued operations Cumulative effect of change in accounting policy Net income (loss) Dividends per share Average number of common shares outstanding Financial Position Working capital Current ratio Total assets Long-term debt Redeemable preferred stock Common stockholders' equity Debt to...

  • Page 56
    ...corporation 2004 Annual Report 107 corporate directory board of directors corporate officers Edward E. Crutchfield 2,3,5 Former Chairman and Chief Executive Officer First Union Corporation Charlotte, North Carolina (Banking) Director since 1992, age 63 Juan Ernesto de Bedout 1,3 Group President...

  • Page 57
    ...the Company's public disclosure as exhibits to the Company's annual report on Form 10-K for the fiscal year ended January 1, 2005. After VF's 2005 Annual Meeting of Stockholders, VF intends to file with the New York Stock Exchange the certification regarding VF's compliance with the NYSE's corporate...

  • Page 58
    VF Corporation 105 Corporate Center Blvd. Greensboro, North Carolina 27408 (336) 424-6000 www.vfc.com ® We fit your life.