North Face 2004 Annual Report Download - page 52

99vf corporation 2004 Annual Report
In thousands 2004 2003 2002
Net sales:
United States $4,678,593 $ 4,090,749 $ 4,078,385
Foreign, primarily Europe 1,375,943 1,116,710 1,005,138
Total $6,054,536 $ 5,207,459 $ 5,083,523
Property, plant and equipment:
United States $ 354,274 $ 381,619 $ 346,637
Mexico 94,489 109,681 125,525
Other foreign, primarily Europe 123,491 100,380 94,384
Total $ 572,254 $ 591,680 $ 566,546
In thousands 2004 2003 2002
Capital expenditures:
Jeanswear $ 37,587 $ 41,495 $ 33,819
Outdoor Apparel and Equipment 8,237 6,889 5,318
Intimate Apparel 7,269 7,660 7,189
Imagewear 3,441 1,578 1,951
Sportswear 8,871 2,845 –
Other 6,567 3,512 3,903
Corporate 9,438 22,640 12,323
Total $ 81,410 $ 86,619 $ 64,503
Depreciation expense:
Jeanswear $ 52,317 $ 53,830 $ 54,068
Outdoor Apparel and Equipment 8,617 3,860 9,545
Intimate Apparel 10,207 9,860 11,358
Imagewear 8,869 13,724 12,275
Sportswear 8,369 2,976 –
Other 10,108 9,538 9,554
Corporate 12,381 10,855 10,598
Total $ 110,868 $ 104,643 $ 107,398
(table continued from previous page)
Information by geographic area is presented below, with sales based on the location of the customer:
Sales to Wal-Mart Stores, Inc., substantially all in the
Jeanswear and Intimate Apparel coalitions, comprised
15.0% of 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.
VF enters into noncancelable operating leases for
retail stores and other facilities and for equipment.
Leases for real estate typically have initial terms
ranging from 5 to 15 years, some with renewal
options. Leases for equipment typically have initial
terms ranging from 2 to 5 years. Most leases have
fixed rentals; expense for leases having lease incentives
or escalating rentals are recorded on a straight-line
basis over the minimum lease terms. Certain of the
leases contain requirements for additional rental
payments based on sales volume or for payments
of real estate taxes and other occupancy costs.
Rent expense included in the Consolidated Statements
of Income was as follows:
Future minimum lease payments are $97.7 million,
$83.7 million, $65.8 million, $52.8 million and
$38.6 million for the years 2005 through 2009,
respectively, and $76.6 million thereafter.
VF enters into licensing agreements that provide
VF rights to market products under trademarks
owned by other parties. Royalties under these
agreements are recognized in Cost of Goods Sold
in the Consolidated Statements of Income.
Certain of these agreements contain provisions
for the payment of minimum royalties. Future
minimum royalty payments, including any required
minimum advertising payments, are $14.3 million,
$16.6 million, $16.2 million, $13.8 million and $4.7
million for the years 2005 through 2009, respectively.
VF in the ordinary course of business enters into
purchase commitments for raw materials, sewing labor
and finished product inventories. These agreements,
typically ranging from 2 to 6 months in duration,
require total payments of $667.2 million in 2005. In
addition, VF has committed to purchase $15.0 million
of finished product in each of the next 10 years in
connection with the sale of a business (Note C).
VF has also entered into commitments for capital
spending, advertising and service and maintenance
agreements for its management information
systems. Future payments under these agreements
are $90.0 million, $8.0 million, $3.2 million,
$1.4 million and $0.1 million for the years
2005 through 2009, respectively.
The trustee of the Employee Stock Ownership Plan
may require VF to redeem Series B Redeemable
Preferred Stock held in participant accounts and
to pay each participant the value of their account,
upon retirement or withdrawal from the ESOP.
The amounts of these redemptions vary based on the
conversion value of the Preferred Stock. Since 2002,
no redemption payments have been required as the
ESOP trustee has converted shares of Series B
Redeemable Preferred Stock for withdrawing
participants into shares of Common Stock.
VF has entered into $80.5 million of surety bonds
and standby letters of credit representing contingent
guarantees of performance under self-insurance
and other programs. These commitments would
only be drawn upon if VF were to fail to meet its
claims obligations.
In thousands 2004 2003 2002
Minimum rent expense $ 95,103 $ 74,367 $ 62,408
Contingent rent 3,669 1,953 381
Rent expense $ 98,772 $ 76,320 $ 62,789
note s – commitments
Worldwide sales by product category are as follows:
In thousands 2004 2003 2002
Jeans and related apparel $2,661,946 $ 2,666,815 $ 2,788,486
Outdoor products 1,003,851 580,663 508,020
Intimate apparel 903,552 830,225 839,786
Sportswear 604,879 248,967 –
Occupational apparel 471,176 450,511 492,798
Other apparel 409,132 430,278 454,433
Total $6,054,536 $ 5,207,459 $ 5,083,523