North Face 2004 Annual Report Download - page 44

83vf corporation 2004 Annual Report
In thousands 2004 2003
Accounts receivable, net $4,363 $ 12,958
Inventories –35,082
Property, plant and equipment, net 6,249 14,305
Other, primarily deferred income taxes 4,181 7,521
$14,793 $ 69,866
Accounts payable $–$ 11,162
Accrued liabilities 15,129 7,274
$15,129 $ 18,436
Activity in the restructuring accruals for the 2003 acquisitions is summarized as follows:
note c – discontinued operations and assets held for sale
At the end of 2004, Accrued Liabilities related primarily to expected losses on formerly occupied leased premises.
note d – accounts receivable
note e – inventories
In 2001, management announced a plan to exit
the Private Label knitwear business and the Jantzen
swimwear business. The Jantzen® trademarks and
certain other assets of this swimwear business were
sold in 2002 for $24.0 million. Liquidation of the
Private Label knitwear business and of the remaining
Jantzen inventories and other assets was completed
during 2002. Both the Private Label knitwear
and the Jantzen businesses are accounted for as
discontinued operations in accordance with FASB
Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Accordingly, the results
of operations and cash flows of these businesses are
separately presented as discontinued operations in
the accompanying financial statements. Summarized
operating results for these discontinued businesses
for 2002 were net sales of $98.0 million; income
before taxes of $13.5 million (including gain
on disposal of $1.4 million); income taxes of
$5.2 million; and income of $8.3 million.
VF’s children’s playwear business (“VF Playwear”)
consisted of the Healthtex® and licensed Nike®
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
$150.0 million of branded childrenswear from the
purchaser over a 10 year period for sale in its
outlet stores. Due to this ongoing involvement,
VF Playwear does not qualify for treatment as a
discontinued operation. VF Playwear contributed
sales of $87.1 million, $144.0 million and
$175.5 million and operating losses of $(14.0)
million, $(7.7) million and $(3.2) million in 2004,
2003 and 2002, respectively. Operating results include
net charges of $9.5 million related to the disposal
of the business in 2004 and a $2.3 million goodwill
impairment charge in 2002.
Assets and liabilities of VF Playwear included in
the respective captions of the Consolidated Balance
Sheets are summarized as follows:
Facilities Lease
In thousands Severance Exit Costs Termination Total
Accrual for 2003 acquisitions $ 6,564 $ 403 $ 13,603 $ 20,570
Cash payments (520) – (655) (1,175)
Balance, December 2003 6,044 403 12,948 19,395
Additional accrual 3,682 – – 3,682
Write-off of assets –(376) – (376)
Cash payments (4,322) (27) (12,948) (17,297)
Balance, December 2004 $5,404 $ – $ – $ 5,404
In thousands 2004 2003
Trade $ 758,882 $ 646,332
Other 53,490 53,300
Total accounts receivable 812,372 699,632
Less allowance for doubtful accounts 60,790 65,769
$ 751,582 $ 633,863
In thousands 2004 2003
Finished products $ 744,517 $ 714,867
Work in process 99,669 91,593
Materials and supplies 129,062 126,525
$ 973,248 $ 932,985
Facilities Lease
In thousands Severance Exit Costs Termination Total
Accrual for 2004 acquisitions $ 24,562 $ 811 $ 1,593 $ 26,966
Cash payments (20,667) – (176) (20,843)
Balance, December 2004 $3,895 $ 811 $ 1,417 $ 6,123
VF completed two other acquisitions during 2003
for a total consideration of $3.7 million. Contingent
consideration of up to $1.3 million related to one
of these acquisitions is payable if certain sales targets
are achieved over each of the years through 2006.
Accordingly, in each of 2004 and 2003, $0.3 million
of contingent consideration was earned and
capitalized as additional licensing intangible assets.
Pro forma operating results for prior periods are
not presented due to immateriality.
VF accrued various restructuring charges in
connection with the 2003 and 2004 acquisitions.
Remaining cash payments related to these actions
will be substantially completed during 2005.
Activity in the restructuring accruals for the 2004
Acquisitions is summarized as follows: