North Face 2008 Annual Report Download - page 3

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To Our Shareholders:
VF is known for a performance-driven culture and excellence
in execution. Over the years, we’ve built and honed highly
disciplined financial and operational processes to help us manage
risk through both good times and bad.
During 2008, these disciplines served us well again, as we
achieved our sixth consecutive year of record revenues and
strong earnings amid unprecedented global economic turmoil.
Revenues in 2008 rose 6% to $7.6 billion while earnings per
share reached $5.42. Earnings included a $.30 per share impact
from a $41 million charge taken in the fourth quarter to realign
our cost structure and protect our future profitability.
Our financial position is solid. We ended 2008 with $382
million in cash, and we have $1.3 billion of borrowing capacity
available under domestic and international lines of credit. Our
debt-to-capital ratio was 25% at year-end, and no significant
long-term debt payments are due until October 2010. Strong cash
flow was a hallmark, with cash flow from operations of $679 million.
In short, the strength of VF’s business model was proven
again in 2008. While we do not expect economic conditions
to improve in 2009, we are well positioned to manage the
challenge—and to emerge from this period stronger than ever.
Protecting Profitability; Investing for Growth
When retail conditions worsened in the fourth quarter of 2008,
we moved quickly to reduce costs across the board. The actions
we’ve taken will result in annual cost savings of $100 million,
starting in 2009. At the same time, we are confident that we
have the right brands and strategies for long-term success, and
we remain committed to investing prudently for future growth,
including investments in our strong brands and in our direct-
to-consumer and international businesses.