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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 4, 1997
Commission file number: 1-5256
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V. F. CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1180120
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1047 NORTH PARK ROAD
WYOMISSING, PENNSYLVANIA 19610
(Address of principal executive offices)
(610) 378-1151
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
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Common Stock, without par value, New York Stock Exchange
stated capital $1 per share and
Preferred Stock Purchase Rights Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
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As of March 1, 1997, 64,009,069 shares of Common Stock of the registrant were
outstanding, and the aggregate market value of the common shares (based on the
closing price of these shares on the New York Stock Exchange) of the registrant
held by nonaffiliates was approximately $3.6 billion. In addition, 1,881,515
shares of Series B ESOP Convertible Preferred Stock of the registrant were
outstanding and convertible into 1,505,212 shares of Common Stock of the
registrant, subject to adjustment. The trustee of the registrant's Employee
Stock Ownership Plan is the sole holder of such shares, and no trading market
exists for the Series B ESOP Convertible Preferred Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report for the fiscal year ended January 4, 1997 (Items
1 and 3 in Part I and Items 5, 6, 7 and 8 in Part II).
Portions of the Proxy Statement dated March 10, 1997 for the Annual Meeting of
Shareholders to be held on April 15, 1997 (Item 4A in Part I, Item 9 in Part II
and Items 10, 11, 12 and 13 in Part III).
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PART I
ITEM 1. BUSINESS
VF Corporation, through its operating subsidiaries, designs, manufactures and
markets branded jeanswear, knitwear, intimate apparel, children's playwear and
other apparel. VF Corporation, organized in 1899, oversees the operations of
its subsidiaries, providing them with financial and administrative resources.
Management of each operating unit is responsible for the growth and development
of its business, within guidelines established by VF Corporation management.
Unless the context indicates otherwise, the term "Company" used herein means VF
Corporation and its subsidiaries.
BUSINESS GROUPS
The Company is organized in five business groups - - Jeanswear, Decorated
Knitwear, Intimate Apparel, Playwear and Specialty Apparel. (See "Recent
Events.") Information regarding the operations, sales and profitability of
these business groups is included on pages 3, 22, 23 and 25 of the Company's
Annual Report to Shareholders for the fiscal year ended January 4, 1997 ("1996
Annual Report"), which information is incorporated herein by reference.
JEANSWEAR
The Jeanswear business group includes jeanswear and other casual apparel
marketed under the LEE(R), WRANGLER(R), RUSTLER(R) and RIDERS(R) brands in the
United States. The Company also offers cotton casual pants and shirts under
the LEE CASUALS(R) and TIMBER CREEK BY WRANGLER(R) brands and licenses the
MARITHE & FRANCOIS GIRBAUD(R) label for branded fashion jeans and casual
apparel in the United States.
According to industry data, approximately 565 million pairs of jeans made of
denim, twill, corduroy and other fabrics were sold in the United States in
1996, representing an increase of 5.5% over 1995. This same data indicates
that the Company currently has the largest combined unit market share at
approximately 27%, with WRANGLER, LEE and RUSTLER having the second, third and
fourth largest unit shares of the jeans market in the United States,
respectively.
In domestic markets, LEE branded products are sold through department and
specialty stores. WRANGLER westernwear is marketed through western specialty
stores, and other WRANGLER brand products are sold primarily through the mass
merchant and discount store channels. The RUSTLER and RIDERS brands are brands
marketed to national discount chains. MARITHE & FRANCOIS GIRBAUD products are
sold to upscale department and specialty stores. Sales for all brands are
generally made directly to retailers through full-time salespersons.
During 1996, 70% of domestic jeanswear sales were derived from garments
produced in Company-owned and operated cutting, sewing and laundry facilities
in the United States. Eighteen percent of domestic jeanswear sales were
produced in owned facilities in Mexico and other Caribbean countries, with the
balance manufactured by various independent domestic and international
contractors.
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The Company also manufactures and markets LEE, WRANGLER and MAVERICK(R)
jeanswear and related products in international markets, where jeanswear is
more of a fashion product and has a higher relative price than similar products
in the United States. International sales are primarily in Western Europe, but
with increasing sales in Eastern Europe. LEE and WRANGLER are sold through
department stores and specialty shops, while MAVERICK branded jeanswear is sold
in the discount channel of distribution. Internationally, jeanswear products
are sold through the Company's sales forces and independent sales agents. The
Company has distributors, agents or licensees for LEE and WRANGLER jeanswear
and related products in foreign markets where the Company does not have owned
operations.
In European markets, 67% of the Company's jeanswear products in 1996 were
produced in owned plants in the United Kingdom, Ireland, Malta and Poland, with
the balance (mostly tops) sourced from independent contractors. The Company
also manufactures and markets LEE products in Mexico and China and participates
in a joint venture in Spain and Portugal. In addition, LEE and WRANGLER are
marketed in Canada.
DECORATED KNITWEAR
The Decorated Knitwear business group includes the manufacturing and marketing
of knitted fleecewear and T-shirts. Operations are vertically integrated and
include the entire process of converting cotton yarn into finished fleece and
T-shirt garments. Products are marketed throughout the United States to
national chain and department stores, discount stores, wholesalers and garment
screen printing operators by an in-house staff of salespersons. In 1996,
approximately one-third of the knitted fleecewear and T-shirts were marketed
under the LEE label. The remainder was manufactured for private label
customers and for the fleece and T-shirt needs of the Company's imprinted
apparel operations.
The Company designs, manufactures and markets imprinted sports apparel under
licenses granted by the four major American professional sports leagues, NASCAR
and other parties. LEE SPORT(R) and NUTMEG(R) branded adult licensed apparel is
distributed through department, sporting goods and athletic specialty stores.
CSA(R) branded products, primarily in children's sizes, are distributed through
mass merchandisers and discount stores. Nutmeg apparel imprinted with
professional soccer and other sports logos is manufactured and marketed in
Europe. In addition, this business group includes JANSPORT(R) branded fleeced
casualwear and T-shirts imprinted with college logos for distribution through
college bookstores.
INTIMATE APPAREL
The Intimate Apparel business group includes the VANITY FAIR(R) and
VASSARETTE(R) brands and a significant private label business in the United
States. The Company manufactures and markets bras, panties, daywear,
shapewear, robes and sleepwear products using the VANITY FAIR label for sales
to domestic department and specialty stores and the VASSARETTE brand for the
discount channel. Most products are sold through the Company's sales force.
During 1996, approximately 40% of domestic intimate apparel sales were derived
from garments sewn in owned domestic plants, 45% from Company-owned facilities
in Mexico and the remainder from independent contractors.
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In international markets, intimate apparel is marketed in department and
specialty stores under the LOU(R) and BOLERO(R) brand names primarily in France
and under the GEMMA(R), INTIMA CHERRY(R) and BELCOR(R) brand names in Spain.
Intimate apparel is marketed in discount stores in France under the VARIANCE(R),
CARINA and SILTEX brand names. Approximately 80% of the apparel is manufactured
from purchased fabric in the Company's facilities in France, Spain, Tunisia and
Madagascar, with the remainder manufactured by independent contractors.
PLAYWEAR
The Playwear business group consists of HEALTHTEX(R) branded products,
preschool sizes of LEE and WRANGLER, and playwear and sleepwear products
imprinted with licensed brands. Products marketed under the HEALTHTEX label
are sold primarily to department and specialty stores. LEE and WRANGLER
children's sizes are marketed in distribution channels consistent with their
respective adult sizes. Playwear products imprinted with characters licensed
from The Walt Disney Company and others are marketed primarily to mass
merchandise and discount stores. Licensed NIKE(R) brand childrenswear is
marketed to department and sports specialty stores.
SPECIALTY APPAREL
The Company is a leading producer of occupational and career apparel sold under
the RED KAP(R) label. Approximately three-fourths of sales are to industrial
laundries that in turn supply work clothes to employers, primarily on a rental
basis, for on-the-job wear by production, service and white-collar personnel.
Products include work pants, slacks, work and dress shirts, overalls, jackets
and smocks. The Company expanded its presence in safety apparel in the United
States and Canada by acquiring Bulwark Protective Apparel Inc. in 1996.
Because industrial laundries maintain minimal inventories of work clothes, a
supplier's ability to offer rapid delivery is an important factor in this
market. The Company's commitment to customer service, supported by an
automated central distribution center with ten satellite locations, has enabled
customer orders to be filled within 24 hours of receipt and has helped the RED
KAP brand obtain a significant share of the industrial laundry rental business.
In addition, the Company markets a line of work clothes nationally to retail
stores under the BIG BEN(R) brand.
The Company designs, manufactures and markets an extensive line of women's
swimwear and sportswear, including coordinated tops and bottoms, under the
JANTZEN(R) trademark and, beginning in 1995, under the licensed NIKE label. A
significant portion of the products are manufactured by independent
contractors. Products are sold primarily to department and specialty stores in
the United States and Canada through the Company's sales force. The JANTZEN
trademark is licensed to other companies in several foreign countries.
The Company also manufactures and markets JANSPORT brand daypacks, sold through
college bookstores and department and sports specialty stores, and JANSPORT
backpacking and mountaineering gear, sold through outdoor and sporting goods
stores. JANSPORT daypacks and bookbags have the leading brand share in the
United States.
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RAW MATERIALS
Raw materials include fabrics made from cotton, synthetics and blends of cotton
and synthetic yarn. For most domestic operations, the Company purchases fabric
from several domestic suppliers against scheduled production. The fabric is
cut and sewn into finished garments in the Company's manufacturing facilities
or, in certain instances, at independent contractors. An increasing percentage
of fabric cut in the Company's domestic facilities is sewn into finished
products in Company-owned plants in Mexico or the Caribbean. Fabric for
international operations is purchased from several international suppliers.
The Company also purchases thread and trim (buttons, zippers, snaps and lace)
from numerous suppliers.
In the domestic knitwear and intimate apparel operations, the Company knits
purchased yarn into fabric in its facilities. The knit fabric is then dyed,
finished and cut in domestic facilities before it is sewn into finished
garments. Cotton yarn and cotton and synthetic blend yarn are purchased from a
major textile company under a long-term supply agreement for the knitwear
operations. Yarn is available from numerous other sources.
The Company has not experienced difficulty in obtaining fabric and other raw
materials to meet production needs during 1996 and does not anticipate
difficulties in 1997. The loss of any one supplier would not have a
significant adverse effect on the Company's business.
SEASONALITY
The apparel industry in the United States has four primary retail selling
seasons -- Spring, Summer, Back-to-School and Holiday, while international
markets typically have Spring and Fall selling seasons. Sales to retailers
generally precede the retail selling seasons, although demand peaks have been
reduced in recent years as more products are being sold on a replenishment
basis.
Overall, with its diversified product offerings, the Company's operating
results are not highly seasonal. On a quarterly basis, consolidated net sales
range from a low of approximately 22% in the first quarter to a high of 27% in
the third quarter. Sales of the Decorated Knitwear business group, however,
are more seasonal in nature, with approximately 60% of its sales of fleece and
T-shirt products in the second half of the year.
Working capital requirements vary throughout the year. Working capital
increases during the first half of the year as inventory builds to support peak
shipping periods, and accordingly decreases during the second half. Cash
provided by operations is substantially higher in the second half of the year
due to higher net income and reduced working capital requirements during that
period.
ADVERTISING
The Company supports its brands through extensive advertising and promotional
programs and through sponsorship of special events. The Company advertises on
national and local radio and television and in consumer and trade publications.
It also participates in cooperative advertising on a shared cost basis with
major retailers in radio, television and various print media. In addition,
point-of-sale fixtures and signage are used to promote products at the retail
level. During 1996, the
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Company spent $271 million advertising and promoting its products, compared
with $231 million in 1995. A significant portion of the savings arising from
the 1995 cost reduction initiatives (see Note M to the consolidated financial
statements in the 1996 Annual Report) are being invested in increased
advertising and other actions to support and build the Company's brands. The
level of promotional spending is expected to increase in 1997.
RECENT EVENTS
Beginning in late 1996, the Company announced a series of organizational
changes that are being implemented during 1997. The Company's principal
operating divisions will be consolidated into five consumer-focused marketing
coalitions -- Jeanswear, Intimate Apparel, Knitwear, Playwear and
International. The marketing functions will remain separate, allowing
marketing specialists to build and develop their brands. However, many of the
Company's sourcing, manufacturing and administrative functions, previously
performed in separate operating divisions, will be carried out on either a
coalition or a Company-wide basis. These consolidations, plus related new
business systems and processes, are expected to cost $150 million over the next
few years but, upon completion, are expected to result in cost savings of $150
million annually.
At the same time, the Company will make additional investments in consumer
research, product development, in-store marketing programs and advertising.
This incremental investment spending to support and build the Company's brands
is expected to total $250 million over the next four to five years.
OTHER MATTERS
COMPETITIVE FACTORS
The apparel industry is highly competitive and consists of a number of domestic
and foreign companies. Management believes that there are only two competitors
in the United States that have consolidated assets and sales greater than those
of the Company. However, in certain product categories in which the Company
operates, there are several competitors that have more assets and sales than the
Company in those categories.
TRADEMARKS AND LICENSES
Trademarks are of material importance to all of the Company's operating
subsidiaries. Company- owned brands are protected by registration or otherwise
in the United States and most other markets where the related products are
sold. These trademark rights are enforced and protected by litigation against
infringement as necessary. The Company has granted licenses to other parties
to manufacture products under the Company's trademarks in product categories
and in geographic areas in which the Company does not operate.
In some instances, the Company pays a royalty to use the trademarks of others.
Apparel is manufactured and marketed under licenses granted by Major League
Baseball, the National Basketball Association, the National Football League,
the National Hockey League, The Walt Disney Company, NIKE, Inc. and others.
Some of these license arrangements are for a short term and may not contain
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specific renewal options. The MARITHE & FRANCOIS GIRBAUD label is under
license in the United States through 1997. Management believes that loss of
any license would not have a material adverse effect on the Company.
CUSTOMERS
THE COMPANY'S CUSTOMERS ARE PRIMARILY DEPARTMENT, SPECIALTY AND DISCOUNT STORES
IN THE UNITED STATES AND IN INTERNATIONAL MARKETS, PRIMARILY IN EUROPE. SALES
TO WAL-MART STORES, INC. TOTALED 10.3% OF TOTAL SALES IN 1996 AND 10.5% IN
1995. SALES TO THE COMPANY'S TEN LARGEST CUSTOMERS AMOUNTED TO 37% OF TOTAL
SALES IN 1996 AND 35% IN 1995.
EMPLOYEES
The Company employs approximately 62,800 men and women. Approximately 5,700
employees are covered by various collective bargaining agreements. Employee
relations are considered to be good.
BACKLOG
The dollar amount of backlog of orders believed to be firm as of the end of the
Company's fiscal year and as of the end of the preceding fiscal year is not
material for an understanding of the business of the Company taken as a whole.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included in Item 1 - "Business," Item 3 - "Legal
Proceedings" and Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are "forward-looking statements" within
the meaning of the federal securities laws. This includes any statements
concerning plans and objectives of management relating to the Company's
operations or economic performance, and assumptions related thereto. In
addition, the Company and its representatives may from time to time make other
oral or written statements that are also forward-looking statements.
These forward-looking statements are made based on management's expectations
and beliefs concerning future events impacting the Company and therefore
involve a number of risks and uncertainties. Management cautions that
forward-looking statements are not guarantees and that actual results could
differ materially from those expressed or implied in the forward-looking
statements.
Important factors that could cause the actual results of operations or
financial condition of the Company to differ include, but are not necessarily
limited to, the overall level of consumer spending for apparel; changes in
trends in the segments of the market in which the Company competes; the
financial strength of the retail industry; actions of competitors that may
impact the Company's business; timely completion of the Company's cost
reduction initiatives; and the impact of unforeseen economic changes in the
markets where the Company competes, such as changes in interest rates, currency
exchange rates, inflation rates, recession, and other external economic and
political factors over which the Company has no control.
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ITEM 2. PROPERTIES.
The Company owns most of its facilities used in manufacturing, distribution and
administrative activities. Certain other facilities are leased under operating
leases that generally contain renewal options. Management believes all
facilities and machinery and equipment are in good condition and are suitable
for the Company's needs. Manufacturing and distribution facilities being
utilized at the end of 1996 are summarized below for the Company's business
groups:
<TABLE>
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Square
Business Group Footage
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Jeanswear 7,700,000
Decorated Knitwear 4,800,000
Intimate Apparel 2,600,000
Playwear 1,200,000
Specialty Apparel 2,300,000
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18,600,000
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In addition, the Company owns or leases various administrative and office
space. The Company also owns or leases facilities having 2,800,000 square feet
of space that is used for factory outlet operations. Approximately 78% of the
factory outlet space is used for selling and warehousing the Company's
products, with the balance consisting of space leased to tenants and common
areas. Finally, the Company owns facilities having 1,000,000 square feet of
space formerly used in its operations but now leased to other parties or held
for sale.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings or investigations pending or threatened
to which the Company is a party or of which any of its property is the subject.
Notwithstanding the foregoing, the text under the caption "Other Matters"
included on page 27 of the 1996 Annual Report is incorporated herein by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The following are the executive officers of VF Corporation as of March 1, 1997.
The term of office of each of the executive officers continues to the next
annual meeting of the Board of Directors to be held April 15, 1997. There is
no family relationship among any of the VF Corporation executive officers.
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<TABLE>
<CAPTION>
Period Served
Name Position Age In Such Office(s)
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<S> <C> <C> <C>
Mackey J. McDonald President 50 October 1993 to date
Chief Executive Officer January 1996 to date
Director October 1993 to date
Candace S. Cummings Vice President - Administration 49 March 1996 to date
& General Counsel
Gerard G. Johnson Vice President - Finance and 56 December 1988 to date
Chief Financial Officer
Timothy A. Lambeth Vice President 55 July 1996 to date
President - European & Asian August 1996 to date
Operations
Daniel G. MacFarlan Vice President 46 April 1995 to date
Chairman - Knitwear, Playwear July 1996 to date
& Intimate Apparel Coalitions
Frank C. Pickard III Vice President - Treasurer 52 April 1994 to date
John P. Schamberger Chairman - Jeanswear Coalition 48 February 1995 to date
Vice President April 1995 to date
Robert K. Shearer Vice President - Controller 45 April 1994 to date
</TABLE>
Mr. McDonald joined the Company's Lee division in 1983, serving in various
management positions until his election as President of the Company's former
Troutman division in 1984. He was named Executive Vice President of the
Wrangler division in 1986 and President of Wrangler in 1988. He was named
Group Vice President of the Company in 1991, President of the Company in
October 1993 and Chief Executive Officer in January 1996. Additional
information is included on page 3 of the 1997 Proxy Statement.
Mrs. Cummings joined the Company as Vice President - General Counsel in January
1995 and became Vice President - Administration & General Counsel in March
1996. Previously, she had been a senior business partner at the international
law firm of Dechert Price & Rhoads where she had been employed since 1972.
Mr. Johnson joined the Company in 1988 as Vice President - Finance and Chief
Financial Officer.
Mr. Lambeth joined the Company in 1968 and has served in various finance,
administrative and marketing positions. He served as president of the
Company's Healthtex division from 1991 to April 1992 and president of Lee
Company from May 1992 to July 1996. He was elected a Vice President of the
Company in July 1996 and President - European & Asian Operations in August
1996.
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Mr. MacFarlan joined the Company's Jantzen division in 1978 and served in
various capacities, including Vice President - Womens Casualwear from 1990 to
May 1992 and Senior Vice President - Sales and Womens Casualwear to July 1993.
He served as President of the Company's VF Factory Outlet division from October
1993 to February 1995. Since November 1994, he has served as President of the
Company's Nutmeg division. He was elected as the Company's Chairman -
Decorated Knitwear & Playwear Coalitions in February 1995, which was expanded
in July 1996 to Chairman - Knitwear, Playwear & Intimate Apparel Coalitions,
and Vice President in April 1995.
Mr. Pickard joined the Company in 1976 and was elected Assistant Controller in
1982, Assistant Treasurer in 1985, Treasurer in 1987 and Vice President -
Treasurer in April 1994.
Mr. Schamberger joined the Company's Wrangler division in 1972 and held various
positions including Vice President - New Brands from 1987 to his election as
Vice President - Consumer Marketing in 1991 and President in May 1992. He was
elected as the Company's Chairman - Jeanswear Coalition in February 1995 and
Vice President in April 1995.
Mr. Shearer joined the Company in 1986 as Assistant Controller and was elected
Controller in 1989 and Vice President - Controller in April 1994.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information concerning the market and price history of the Company's Common
Stock, plus dividend information, as reported under the caption "Quarterly
Results of Operations" on page 33 and under the captions "Investor Information
- - Common Stock, Shareholders of Record, Dividend Policy, Dividend Reinvestment
Plan, Dividend Direct Deposit and Quarterly Common Stock Price Information" on
the inside back cover of the 1996 Annual Report, is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the Company for each of its last five fiscal years
under the caption "Financial Summary" on pages 34 and 35 of the 1996 Annual
Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
A discussion of the Company's financial condition and results of operations is
incorporated herein by reference to pages 23, 25 and 27 of the 1996 Annual
Report.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements of the Company and specific supplementary financial
information are incorporated herein by reference to pages 21, 22, 24, 26 and 28
through 33 of the 1996 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Information under the caption "Change in Accountants" on page 25 of the 1997
Proxy Statement is incorporated herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information under the caption "Election of Directors" on pages 2 through 5 of
the 1997 Proxy Statement is incorporated herein by reference. See Item 4A with
regard to Executive Officers.
Information under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 25 of the 1997 Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information on pages 10 through 15 of the 1997 Proxy Statement with regard to
this item is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information under the caption "Certain Beneficial Owners" on page 17 and
"Common Stock Ownership of Management" on page 18 of the 1997 Proxy Statement
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information under the caption "Election of Directors" with respect to Messrs.
Hurst and Sharp on page 2 and with respect to Mr. Crutchfield on page 4 of
the 1997 Proxy Statement is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial statements - Included on pages 21, 22, 24,
26 and 28 through 33 of the 1996 Annual Report (Exhibit 13) and
incorporated by reference in Item 8:
Consolidated statements of income - - Fiscal years ended January 4,
1997, December 30, 1995 and December 31, 1994
Consolidated balance sheets - - January 4, 1997 and December 30, 1995
Consolidated statements of cash flows - - Fiscal years ended January
4, 1997, December 30, 1995 and December 31, 1994
Consolidated statements of common shareholders' equity - - Fiscal
years ended January 4, 1997, December 30, 1995 and December 31, 1994
Notes to consolidated financial statements
Report of independent accountants
2. Financial statement schedules - The following
consolidated financial statement schedule is included herein:
Schedule II - - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and
therefore have been omitted.
3. Exhibits
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Number Description
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<S> <C>
3 Articles of incorporation and bylaws:
(A) Articles of Incorporation, as amended and restated as of April 18, 1986 and as presently in effect
(Incorporated by reference to Exhibit 3(A) to Form 10-K for the fiscal year ended January 4, 1992)
(B) Statement Affecting Class or Series of Shares (Incorporated by reference to Exhibit 3(B) to Form 10-K for
the fiscal year ended January 2, 1993)
(C) Statement with Respect to Shares of Series B ESOP Convertible Preferred Stock (Incorporated by reference
to Exhibit 4.2 to Form 8-K dated January 22, 1990)
</TABLE>
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<TABLE>
<S> <C>
(D) Bylaws, as amended through January 1, 1996 and as presently in effect (Incorporated by reference to
Exhibit 3(D) to Form 10-K for the fiscal year ended December 30, 1995)
4 Instruments defining the rights of security holders, including indentures:
(A) A specimen of the Company's Common Stock certificate (Incorporated by reference to Exhibit 4(A) to Form
10-K for the fiscal year ended January 2, 1993)
(B) A specimen of the Company's Series B ESOP Convertible Preferred Stock certificate (Incorporated by
reference to Exhibit 4(B) to Form 10-K for the fiscal year ended December 29, 1990)
(C) Indenture between the Company and Morgan Guaranty Trust Company of New York, dated January 1, 1987
(Incorporated by reference to Exhibit 4.1 to Form S-3 Registration No. 33-10939)
(D) First Supplemental Indenture between the Company, Morgan Guaranty Trust Company of New York and United
States Trust Company of New York, dated September 1, 1989 (Incorporated by reference to Exhibit 4.3 to
Form S-3 Registration No. 33-30889)
(E) Rights Agreement, dated January 13, 1988, between the Company and Morgan Shareholder Services Trust
Company (Incorporated by reference to Exhibit 4(E) to Form 10-K for the fiscal year ended January 2, 1993)
(F) Amendment No. 1 to Rights Agreement, dated April 17, 1990, between the Company and First Chicago Trust
Company of New York (Incorporated by reference to Exhibit 4 to Form 10-Q for the fiscal quarter ended June
30, 1990)
(G) Amendment No. 2 to Rights Agreement, dated December 4, 1990, between the Company and First Chicago Trust
Company of New York (Incorporated by reference to Exhibit 3 to Form 8-K dated December 4, 1990)
(H) Second Supplemental Indenture between the Company and United States Trust Company of New York as Trustee
(Incorporated by reference to Exhibit 4.1 to Form 8-K dated April 6, 1994)
10 Material contracts:
(A) 1982 Stock Option Plan (Incorporated by reference to Exhibit 4.1.1 of Post-Effective Amendment No. 1 to
Form S-8/S-3, Registration No. 33-26566)
(B) 1991 Stock Option Plan (Incorporated by reference to Exhibit A of the Company's 1992 Proxy Statement dated
March 18, 1992)
(C) Annual Discretionary Management Incentive Compensation Program (Incorporated by reference to Exhibit 10(C)
to Form 10-K for the fiscal year ended January 4, 1992)
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
(D) Deferred Compensation Plan (Incorporated by reference to Exhibit 10(B) to Form 10-K for the fiscal year
ended December 29, 1990)
(E) Executive Deferred Savings Plan (Incorporated by reference to Exhibit 10(E) to Form 10-K for the fiscal
year ended January 4, 1992)
(F) Amended and Restated Supplemental Executive Retirement Plan, dated May 16, 1989
(Incorporated by reference to Exhibit 10(F) to Form 10-K for the fiscal year ended December 31, 1994)
(G) First Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for L. R. Pugh (Incorporated by reference to Exhibit 10(G) to Form 10-K for the fiscal
year ended December 31, 1994)
(H) Second Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for Mid-Career Senior Management (Incorporated by reference to Exhibit 10(H) to Form 10-K
for the fiscal year ended December 31, 1994)
(I) Third Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for Senior Management (Incorporated by reference to Exhibit 10(I) to Form 10-K for the
fiscal year ended December 31, 1994)
(J) Fourth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for Participants in the Company's Deferred Compensation Plan (Incorporated by reference to
Exhibit 10(J) to Form 10-K for the fiscal year ended December 31, 1994)
(K) Fifth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan which funds certain benefits upon a Change in Control (Incorporated by reference to
Exhibit 10(K) to Form 10-K for the fiscal year ended December 31, 1994)
(L) Seventh Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for Participants in the Company's Executive Deferred Savings Plan (Incorporated by
reference to Exhibit 10(L) to Form 10-K for the fiscal year ended December 31, 1994)
(M) Eighth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive
Retirement Plan for Participants whose Pension Plan Benefits are limited by the Internal Revenue Code
(Incorporated by reference to Exhibit 10(M) to Form 10-K for the fiscal year ended December 31, 1994)
(N) Resolution of the Board of Directors dated December 3, 1996 relating to lump sum payments under the
Company's Supplemental Executive Retirement Plan
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
(O) Form of Change in Control Agreement with senior management of the Company (Incorporated by reference to
Exhibit 10(J) to Form 10-K for the fiscal year ended December 29, 1990)
(P) Form of Change in Control Agreement with other management of the Company (Incorporated by reference to
Exhibit 10(K) to Form 10-K for the fiscal year ended December 29, 1990)
(Q) Form of Change in Control Agreement with management of subsidiaries of the Company (Incorporated by
reference to Exhibit 10(L) to Form 10-K for the fiscal year ended December 29, 1990)
(R) Revolving Credit Agreement, dated October 20, 1994 (Incorporated by reference to Exhibit 10(Q) to Form
10-K for the fiscal year ended December 31, 1994)
(S) Executive Incentive Compensation Plan (Incorporated by reference to Exhibit 10(R) to Form 10-K for the
fiscal year ended December 31, 1994)
(T) Restricted Stock Agreement (Incorporated by reference to Exhibit 10(S) to Form 10-K for the fiscal year
ended December 31, 1994)
(U) Discretionary Supplemental Executive Bonus Plan (Incorporated by reference to Exhibit 10(T) to Form 10-K
for the fiscal year ended December 31, 1994)
(V) 1995 Key Employee Restricted Stock Plan (Incorporated by reference to Exhibit 10(U) to Form 10-K for the
fiscal year ended December 30, 1995)
(W) VF Corporation Deferred Savings Plan for Non-Employee Directors
11 Computation of earnings per common share
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consents of Coopers & Lybrand L.L.P.
23.2 Consents of Ernst & Young LLP
23.3 Report of Ernst & Young LLP
23.4 Report of Coopers & Lybrand L.L.P.
23.5 Report of Ernst & Young LLP
24 Power of attorney
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
27 Financial data schedule
99 Additional exhibits:
(A) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for Salaried Employees for the year ended
December 31, 1996
</TABLE>
All other exhibits for which provision is made in the applicable regulations of
the Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of the fiscal
year ended January 4, 1997.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
V.F. CORPORATION
By: /s/ Mackey J. McDonald
--------------------------
Mackey J. McDonald
President
(Chief Executive Officer)
By: /s/ Gerald G. Johnson
-----------------------------
Gerard G. Johnson
Vice President - Finance
(Chief Financial Officer)
By: /s/ Robert K. Shearer
-----------------------------
Robert K. Shearer
Vice President - Controller
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
Robert D. Buzzell* Director
Edward E. Crutchfield* Director
Ursula F. Fairbairn* Director
Barbara S. Feigin* Director
Roger S. Hillas* Director
Leon C. Holt, Jr.* Director
Robert J. Hurst* Director March 24, 1997
Mackey J. McDonald* Director
William E. Pike* Director
Lawrence R. Pugh* Director
M. Rust Sharp* Director
L. Dudley Walker* Director
*By: /s/ L. M. Tarnoski March 24, 1997
------------------------------
L. M. Tarnoski, Attorney-in-Fact
18
<PAGE> 19
VF CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
======================================================================================================================
COL. A COL. B COL. C COL. D COL. E
======================================================================================================================
ADDITIONS
============================
(1) (2)
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other Accounts Describe End of
Description of Period Expenses Describe Period
======================================================================================================================
(Dollars in thousands)
<S> <C> <C> <C> <C>
Fiscal year ended January 4, 1997
Allowance for doubtful accounts $34,621 $18,490 $12,858 (A) $40,253
========== ========== ========== ==========
Valuation allowance for deferred
income tax assets $22,154 $9,874 $2,732 (B) $29,296
========== ========== ========== ==========
Fiscal year ended December 30, 1995:
Allowance for doubtful accounts $32,794 $14,967 $13,140 (A) $34,621
========== ========== ========== ==========
Valuation allowance for deferred
income tax assets $10,866 $12,518 $1,230 (B) $22,154
========== ========== ========== ==========
Fiscal year ended December 31, 1994:
Allowance for doubtful accounts $28,808 $11,274 $7,288 (A) $32,794
========== ========== ========== ==========
Valuation allowance for deferred
income tax assets $6,733 $4,203 $70 (B) $10,866
========== ========== ========== ==========
</TABLE>
(A) Deductions include accounts written off, net of recoveries, and in 1994
net of additions of $2.4 million from the acquisition of subsidiaries.
(B) Deduction relates to circumstances where it is more likely than not that
deferred tax assets will be realize
19
<PAGE> 20
VF CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
3 Articles of incorporation and bylaws:
(A) Articles of Incorporation, as amended and restated as of April 18, 1986 and as presently in effect (Incorporated
by reference to Exhibit 3(A) to Form 10-K for the fiscal year ended January 4, 1992)
(B) Statement Affecting Class or Series of Shares (Incorporated by reference to Exhibit 3(B) to Form 10-K for the
fiscal year ended January 2, 1993)
(C) Statement with Respect to Shares of Series B ESOP Convertible Preferred Stock (Incorporated by reference to
Exhibit 4.2 to Form 8-K dated January 22, 1990)
(D) Bylaws, as amended through January 1, 1996 and as presently in effect (Incorporated by reference to Exhibit 3(D)
to Form 10-K for the fiscal year ended December 30, 1995)
4 Instruments defining the rights of security holders, including indentures:
(A) A specimen of the Company's Common Stock certificate (Incorporated by reference to Exhibit 4(A) to Form 10-K for
the fiscal year ended January 2, 1993)
(B) A specimen of the Company's Series B ESOP Convertible Preferred Stock certificate (Incorporated by reference to
Exhibit 4(B) to Form 10-K for the fiscal year ended December 29, 1990)
(C) Indenture between the Company and Morgan Guaranty Trust Company of New York, dated January 1, 1987 (Incorporated
by reference to Exhibit 4.1 to Form S-3 Registration No. 33-10939)
(D) First Supplemental Indenture between the Company, Morgan Guaranty Trust Company of New York and United States
Trust Company of New York, dated September 1, 1989 (Incorporated by reference to Exhibit 4.3 to Form S-3
Registration No. 33-30889)
(E) Rights Agreement, dated January 13, 1988, between the Company and Morgan Shareholder Services Trust Company
(Incorporated by reference to Exhibit 4(E) to Form 10-K for the fiscal year ended January 2, 1993)
(F) Amendment No. 1 to Rights Agreement, dated April 17, 1990, between the Company and First Chicago Trust Company of
New York (Incorporated by reference to Exhibit 4 to Form 10-Q for the fiscal quarter ended June 30, 1990)
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
(G) Amendment No. 2 to Rights Agreement, dated December 4, 1990, between the Company and First Chicago Trust Company
of New York (Incorporated by reference to Exhibit 3 to Form 8-K dated December 4, 1990)
(H) Second Supplemental Indenture between the Company and United States Trust Company of New York as Trustee
(Incorporated by reference to Exhibit 4.1 to Form 8-K dated April 6, 1994)
10 Material contracts:
(A) 1982 Stock Option Plan (Incorporated by reference to Exhibit 4.1.1 of Post-Effective Amendment No. 1 to Form
S-8/S-3, Registration No. 33-26566)
(B) 1991 Stock Option Plan (Incorporated by reference to Exhibit A of the Company's 1992 Proxy Statement dated March
18, 1992)
(C) Annual Discretionary Management Incentive Compensation Program (Incorporated by reference to Exhibit 10(C) to Form
10-K for the fiscal year ended January 4, 1992)
(D) Deferred Compensation Plan (Incorporated by reference to Exhibit 10(B) to Form 10-K for the fiscal year ended
December 29, 1990)
(E) Executive Deferred Savings Plan (Incorporated by reference to Exhibit 10(E) to Form 10-K for the fiscal year ended
January 4, 1992)
(F) Amended and Restated Supplemental Executive Retirement Plan, dated May 16, 1989
(Incorporated by reference to Exhibit 10(F) to Form 10-K for the fiscal year ended December 31, 1994)
(G) First Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for L. R. Pugh (Incorporated by reference to Exhibit 10(G) to Form 10-K for the fiscal year ended December 31,
1994)
(H) Second Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for Mid-Career Senior Management (Incorporated by reference to Exhibit 10(H) to Form 10-K for the fiscal year
ended December 31, 1994)
(I) Third Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for Senior Management (Incorporated by reference to Exhibit 10(I) to Form 10-K for the fiscal year ended December
31, 1994)
(J) Fourth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for Participants in the Company's Deferred Compensation Plan (Incorporated by reference to Exhibit 10(J) to Form
10-K for the fiscal year ended December 31, 1994)
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
(K) Fifth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
which funds certain benefits upon a Change in Control (Incorporated by reference to Exhibit 10(K) to Form 10-K for
the fiscal year ended December 31, 1994)
(L) Seventh Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for Participants in the Company's Executive Deferred Savings Plan (Incorporated by reference to Exhibit 10(L) to
Form 10-K for the fiscal year ended December 31, 1994)
(M) Eighth Amended Annual Benefit Determination under the Amended and Restated Supplemental Executive Retirement Plan
for Participants whose Pension Plan Benefits are limited by the Internal Revenue Code (Incorporated by reference
to Exhibit 10(M) to Form 10-K for the fiscal year ended December 31, 1994)
(N) Resolution of the Board of Directors dated December 3, 1996 relating to lump sum payments under the Company's
Supplemental Executive Retirement Plan
(O) Form of Change in Control Agreement with senior management of the Company (Incorporated by reference to Exhibit
10(J) to Form 10-K for the fiscal year ended December 29, 1990)
(P) Form of Change in Control Agreement with other management of the Company (Incorporated by reference to Exhibit
10(K) to Form 10-K for the fiscal year ended December 29, 1990)
(Q) Form of Change in Control Agreement with management of subsidiaries of the Company (Incorporated by reference to
Exhibit 10(L) to Form 10-K for the fiscal year ended December 29, 1990)
(R) Revolving Credit Agreement, dated October 20, 1994 (Incorporated by reference to Exhibit 10(Q) to Form 10-K for
the fiscal year ended December 31, 1994)
(S) Executive Incentive Compensation Plan (Incorporated by reference to Exhibit 10(R) to Form 10-K for the fiscal year
ended December 31, 1994)
(T) Restricted Stock Agreement (Incorporated by reference to Exhibit 10(S) to Form 10-K for the fiscal year ended
December 31, 1994)
(U) Discretionary Supplemental Executive Bonus Plan (Incorporated by reference to Exhibit 10(T) to Form 10-K for the
fiscal year ended December 31, 1994)
(V) 1995 Key Employee Restricted Stock Plan (Incorporated by reference to Exhibit 10(U) to Form 10-K for the fiscal
year ended December 30, 1995)
(W) VF Corporation Deferred Savings Plan for Non-Employee Directors
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
11 Computation of earnings per common share
13 Annual report to security holders
21 Subsidiaries of the Corporation
23.1 Consents of Coopers & Lybrand L.L.P.
23.2 Consents of Ernst & Young LLP
23.3 Report of Ernst & Young LLP
23.4 Report of Coopers & Lybrand L.L.P.
23.5 Report of Ernst & Young LLP
24 Power of attorney
27 Financial data schedule
99 Additional exhibits:
(A) Form 11-K for VF Corporation Tax-Advantaged Savings Plan for Salaried Employees for the year ended
December 31, 1996
</TABLE>
<PAGE> 1
Exhibit 10(n)
Resolution of the Board of Directors of VF Corporation dated December 3, 1996:
RESOLVED: That the Pension Plan Committee be and is hereby
authorized to approve requests for lump sum payments that may be made
in the future by VF Supplemental Executive Retirement Plan (SERP)
participants under Section 4.3 of the SERP, provided that in the
judgment of such Committee such approval would be in the best interest
of the Corporation.
<PAGE> 1
VF CORPORATION
DEFERRED SAVINGS PLAN FOR NON-EMPLOYE DIRECTORS
<PAGE> 2
VF CORPORATION
DEFERRED SAVINGS PLAN FOR NON-EMPLOYEE DIRECTORS
VF Corporation (the "Company") hereby establishes this
Deferred Savings Plan for Non-Employee Directors (the "Plan") pursuant to which
non-employee members of its Board of Directors may elect to defer receipt of all
or any portion of the compensation payable to them for services rendered to the
Company. The intention of VF Corporation is that the Plan be at all times
maintained on an unfunded basis for federal income tax purposes under the
Internal Revenue Code of 1986, as amended ("Code"), and exempt from the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The plan shall be effective as of March 1, 1997.
SECTION I
DEFINITIONS
Unless otherwise required by the context, the terms used
herein shall have the meanings as set forth below:
1. "ACCRUED BENEFIT" means the sum of a Participant's
Deferrals (and any gains and losses credited thereon).
2. "BENEFICIARY" means the individual or entity named
pursuant to the Plan to receive benefit payments hereunder in the
event of the death of the Participant.
3. "COMMITTEE" means the VF Corporation Pension Plan
Committee.
4. "COMPANY" means VF Corporation, a Pennsylvania
corporation.
5. "COMPENSATION" means a Participant's aggregate
compensation payable by the Company for services rendered as a
Director, including the annual base retainer and attendance fees
for board and committee meetings.
6. "DEFERRAL" means that portion of a Participant's
Compensation elected to be deferred hereunder.
7. "PARTICIPANT" means a Director who is not employed
by the Company or any of its subsidiaries or affiliates.
8. "PLAN" means the VF Deferred Savings Plan for Non-
Employee Directors, as it may be amended from time to time.
1
<PAGE> 3
9. "PLAN YEAR" means the calendar year, except that
with respect to the first year, the Plan Year shall commence
March 1, 1997 and end December 31, 1997.
10. "SEVERANCE FROM SERVICE" means the date on which a
Participant ceases to be a Director of the Company.
11. "SPOUSE" means the person to whom the Participant
is legally married.
SECTION II
ELIGIBILITY
1. A Director shall be eligible to make Deferral
elections under this Plan as long as he or she (a) remains a Director of the
Company and (b) is not concurrently employed by the Company or any of its
subsidiaries or affiliates.
2. Participation in this Plan is voluntary.
SECTION III
DEFERRALS
1. ELECTION. A Participant may elect to defer up to 100%
of his or her Compensation by directing the Company to reduce his or her
Compensation by a whole percentage or amount authorized by an agreement executed
by the Participant and approved by the Committee. Such Deferral election shall
be made during the December immediately prior to the Plan Year to which the
election relates, provided that for the first Plan Year, the election shall be
made on or before March 1, 1997.
2. NON-DEFERRED COMPENSATION. Any Compensation not
deferred under this Plan shall be paid in accordance with normal
Company policy.
3. VESTING. A Participant shall have a nonforfeitable
right to his or her Deferrals and any credited gains or losses attributable
thereto.
4. CHANGE OF ELECTION. The percentage or amount of
Compensation designated by the Participant as a Deferral will continue in
effect, notwithstanding any change in Compensation, until the Participant
requests a change of such percentage or amount (increase, decrease or
suspension) and obtains the consent of the Committee. A Participant, by
submitting a written election form to the Committee prior to the first day of
the calendar quarter for which the election is to become effective, may request
a change of the percentage or amount of Deferral. If the Committee consents,
such change shall become effective no later than the first day of the calendar
quarter next following such consent.
2
<PAGE> 4
SECTION IV
INVESTMENT
A Participant's Deferrals shall be credited with gains and
losses as if such Deferrals had been invested in a hypothetical fund which
invests in common stock of the Company, purchased on the open market at the then
prevailing price on the New York Stock Exchange on the date of purchase or in a
private transaction with a seller other than the Company.
SECTION V
RECORDS
The Committee shall create and maintain adequate records, in
book entry form, for each Participant of Deferrals and credited gains or losses
attributable thereto. Each Participant shall be informed of the status of his or
her Accrued Benefit at least quarterly.
SECTION VI
PLAN BENEFITS
1. SEVERANCE FROM SERVICE. Upon a Participant's
Severance from Service, he or she shall be entitled to his or her
Accrued Benefit payable in accordance with Section VII.
2. DEATH. In the event of the death of a Participant
prior to Severance from Service, the Participant's Beneficiary shall be entitled
to a benefit equal to the Participant's Accrued Benefit, payable in accordance
with Section VII.
3. BENEFICIARY. Each Participant should designate a
Beneficiary (along with alternate beneficiaries) to whom, in the event of the
Participant's death, any benefit is payable hereunder. Each Participant has the
right to change any designation of Beneficiary and such change automatically
revokes any prior designation. A designation or change of Beneficiary must be in
writing on forms supplied by the Committee and any change of Beneficiary will
not become effective until filed with the Committee; provided, however, that the
Committee shall not recognize the validity of any designation received after the
death of the Participant. The interest of any Beneficiary who dies before the
Participant will terminate unless otherwise provided. If a Beneficiary is not
validly designated, or is not living or cannot be found at the date of payment,
any amount payable pursuant to this Plan will be paid to the Spouse of the
Participant if living at the time of payment, otherwise in equal shares to such
of the children of the Participant as may be living at the time of payment;
provided, however, that if there is no surviving Spouse or child at the time of
payment, such payment will be made to the estate of the Participant.
3
<PAGE> 5
SECTION VII
PAYMENT OF BENEFITS
1. The normal form for the payment of a Participant's
Accrued Benefit shall be a lump-sum payment in cash, payable as soon as
practicable after the event giving rise to the distribution.
2. Notwithstanding the foregoing, a Participant may
request, by filing an application in writing to the Committee, that payment be
made in installments over a period of not more than ten (10) years. Such written
application must be made to the Committee at least sixty (60) days prior to the
Participant's Severance from Service, and the decision to permit the requested
installment payments shall be made at the sole discretion of the Committee
taking into account the interests of the Participant and the Company.
SECTION VIII
FUNDING STATUS
This Plan is unfunded. All obligations hereunder shall
constitute an unsecured promise of the Company to pay a Participant's benefit
out of the general assets of the Company, subject to all of the terms and
conditions of the Plan, as amended from time to time, and applicable law. A
Participant hereunder shall have no greater right to benefits provided hereunder
than that of any unsecured general creditor of the Company.
SECTION IX
ADMINISTRATION
1. The Plan shall be administered by the Committee
which shall have the following powers and responsibilities.
(a) to amend the Plan;
(b) to terminate the Plan;
(c) to construe the Plan, make factual
determinations, consider requests made by
Participants, correct defects, and take any
and all similar actions to the extent
necessary to administer the Plan, with any
instructions or interpretations of the Plan
made in good faith by the Committee to be
final and conclusive for all purposes;
(d) to prepare periodic administration reports
to the Board of Directors which will show,
in reasonable detail, the administrative
operations of the Plan; and
4
<PAGE> 6
(e) to take all other actions and do all other
things which are reasonable and necessary to
the proper administration of the Plan.
2. The Committee shall have complete discretion in
carrying out its powers and responsibilities under the Plan, and its exercise of
discretion hereunder shall be final and conclusive.
3. The Committee may, in writing, delegate some or all
of its powers and responsibilities to any other person or entity.
4. The Committee may hold meetings upon such notice, at
such time or times, and at such place or places as it may determine. The
majority of the members of the Committee at the time in office will constitute a
quorum for the transaction of business at all meetings and a majority vote of
those present and constituting a quorum at any meeting will be required for
action. The Committee may also act by written consent of a majority of its
members.
5. The Committee may adopt such rules for administration
of the Plan as is considered desirable, provided they do not conflict with the
Plan. Records of administration of the Plan will be kept, and Participants and
their Beneficiaries may examine records pertaining directly to themselves.
6. The Committee may retain such counsel, and actuarial,
accounting, clerical and other services as they may require to carry out the
provisions and purposes of the Plan.
7. The Committee shall be entitled to rely upon all
tables, valuations, certificates, and reports furnished by any duly appointed
auditor, or actuary, upon all certificates and reports made by any investment
manager, or any duly appointed accountant, and upon all opinions given by any
duly appointed legal counsel.
8. No member of the Committee shall be personally liable
by virtue of any instrument executed by the member, or on the member's behalf,
as a member of the Committee. Neither the Company nor any of its officers or
directors, nor any member of the Committee, shall be personally liable for any
action or inaction with respect to any duty or responsibility imposed upon such
person by the terms of the Plan unless such action or inaction is judicially
determined to be a breach of that person's responsibility as a fiduciary with
respect to the Plan under any applicable law. The Company shall indemnify and
hold harmless its officers, directors, and each member of the Committee against
any and all claims, losses, damages, expenses (including attorneys' fees), and
liability (including, in each case, amounts paid in settlement), arising from
any action or failure to act, except when the same is judicially determined to
be due to the gross negligence or willful misconduct of such officer, director
or member of the Committee. The foregoing right of indemnification shall be in
addition to any other rights to which any such person may be entitled as a
matter of law.
5
<PAGE> 7
SECTION X
MODIFICATION AND TERMINATION
The Committee reserves the right to terminate this Plan at any
time or to modify, amend or suspend it from time to time. Any such termination
or modification shall be effective at such date as the Committee may determine.
The Committee shall promptly give notice of any such modification or termination
to all Participants. A modification may affect Participants, irrespective of
whether they are past, current or future Participants, provided, however, that a
modification may not eliminate or reduce the Accrued Benefit of any Participant
as of the effective date of such modification.
SECTION XI
GENERAL PROVISIONS
1. Nothing contained herein shall be deemed to give
any Non-Employee Director the right to be retained in the service
of the Company.
2. It is a condition of this Plan, and all rights of
each Participant shall be subject thereto, that no right or interest of any
Participant under this Plan or in his or her credited Deferrals (and any
credited gains or losses attributable thereto) shall be assignable or
transferable in whole or in part, either directly or by operation of law or
otherwise, including but without limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy, or in any other manner, subject, however, to
applicable law, but excluding devolution by death or mental incompetency, and no
right or interest of any Participant under this Plan or in his or her credited
Deferrals (and any credited gains or losses attributable thereto) shall be
liable for or subject to any obligation or liability of such Participant,
subject, however, to applicable law.
3. All payments of benefits under the Plan shall be
subject to such taxes and other withholdings (federal, state or local) as may be
due thereon, and the determination of the Committee as to withholding with
respect to payments shall be binding upon the Participant and each Beneficiary.
4. The sale of all of the assets of the Company, or a
merger, consolidation or reorganization of the Company wherein the Company is
not the surviving corporation, or any other transaction which, in effect,
amounts to a sale of the Company or voting control thereof, shall not terminate
this Plan or any related agreements and the obligations created hereunder or
thereby shall be binding upon the successors and assigns of the Company.
5. If a Participant or Beneficiary entitled to receive
any benefits hereunder is deemed by the Committee or is adjudged to be legally
incapable of giving valid receipt and discharge for such benefits, the benefits
will be paid to such persons as the Committee might designate or to the duly
appointed guardian.
6
<PAGE> 8
6. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding the conflict of law rules applicable therein.
7
<PAGE> 1
Exhibit 11
VF CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
===========================================
JANUARY 4 DECEMBER 30 DECEMBER 31
1997 1995 1994
============ ============ ============
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income $299,524 $157,291 $274,536
Less Preferred Stock dividends and
redemption premium 4,407 3,683 3,430
-------- -------- --------
Net income available to common stockholders $295,117 $153,608 $271,106
======== ======== ========
Average number of common shares outstanding 63,646 63,743 64,620
======== ======== ========
Primary earnings per share $4.64 $2.41 $4.20
======== ======== ========
FULLY DILUTED EARNINGS PER SHARE
Net income $299,524 $157,291 $274,536
Increased ESOP contribution required if
Preferred Stock were converted to
Common Stock 1,318 1,430 1,508
-------- -------- --------
Fully diluted earnings $298,206 $155,861 $273,028
======== ======== ========
Average number of common shares outstanding 63,646 63,743 64,620
Additional common equivalent shares resulting
from:
Conversion of Preferred Stock 1,528 1,586 1,623
Dilutive effect of stock options and
restricted shares 533 409 351
-------- -------- --------
Average number of common and common
equivalent shares 65,707 65,738 66,594
======== ======== ========
Fully diluted earnings per share $4.54 $2.37 $4.10
======== ======== ========
</TABLE>
<PAGE> 1
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
VF Corporation
We have audited the accompanying consolidated balance sheets of VF Corporation
as of January 4, 1997 and December 30, 1995, and the related consolidated
statements of income, cash flows, and common shareholders' equity for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of VF Corporation for
the year ended December 31, 1994 were audited by other auditors, whose report
dated February 8, 1995 expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of VF Corporation at
January 4, 1997 and December 30, 1995, and the consolidated results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
Philadelphia, Pennsylvania
February 6, 1997
<PAGE> 2
VF CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 4 DECEMBER 30
In thousands 1997 1995
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 270,629 $ 84,075
Accounts receivable, less allowances of
$40,253 in 1996 and $34,621 in 1995 592,942 629,506
Inventories 730,823 841,907
Deferred income taxes 90,556 84,952
Other current assets 21,376 27,197
----------- -----------
Total current assets 1,706,326 1,667,637
PROPERTY, PLANT AND EQUIPMENT 721,524 749,880
INTANGIBLE ASSETS 863,930 887,606
OTHER ASSETS 157,755 141,948
----------- -----------
$ 3,449,535 $ 3,447,071
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 17,528 $ 229,945
Current portion of long-term debt 1,298 2,715
Accounts payable 320,056 276,598
Accrued liabilities 427,385 359,062
----------- -----------
Total current liabilities 766,267 868,320
LONG-TERM DEBT 519,058 614,217
OTHER LIABILITIES 164,077 169,392
REDEEMABLE PREFERRED STOCK 58,092 60,667
DEFERRED CONTRIBUTIONS TO EMPLOYEE STOCK OWNERSHIP PLAN (31,698) (37,031)
----------- -----------
26,394 23,636
COMMON SHAREHOLDERS' EQUITY
Common Stock, stated value $1; shares authorized 150,000,000;
shares outstanding, 63,907,874 in 1996 and 63,438,933 in 1995 63,908 63,439
Additional paid-in capital 668,554 593,976
Foreign currency translation 6,428 20,483
Retained earnings 1,234,849 1,093,608
----------- -----------
1,973,739 1,771,506
----------- -----------
$ 3,449,535 $ 3,447,071
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
VF CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------
JANUARY 4 DECEMBER 30 DECEMBER 31
In thousands, except per share amounts 1997 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
NET SALES $ 5,137,178 $ 5,062,299 $ 4,971,713
COSTS AND OPERATING EXPENSES
Cost of products sold 3,458,166 3,577,555 3,387,295
Marketing, administrative and general expenses 1,122,076 1,131,290 1,045,615
Other operating expense (income) (347) 6,064 8,297
----------- ----------- -----------
4,579,895 4,714,909 4,441,207
----------- ----------- -----------
OPERATING INCOME 557,283 347,390 530,506
OTHER INCOME (EXPENSE)
Interest income 13,406 11,085 9,296
Interest expense (62,793) (77,302) (80,280)
Miscellaneous, net 512 2,962 (3,861)
----------- ----------- -----------
(48,875) (63,255) (74,845)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 508,408 284,135 455,661
INCOME TAXES 208,884 126,844 181,125
----------- ----------- -----------
NET INCOME $ 299,524 $ 157,291 $ 274,536
=========== =========== ===========
EARNINGS PER COMMON SHARE
Primary $ 4.64 $ 2.41 $ 4.20
Fully diluted 4.54 2.37 4.10
CASH DIVIDENDS PER COMMON SHARE $ 1.46 $ 1.38 $ 1.30
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 63,646 63,743 64,620
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
VF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------
JANUARY 4 DECEMBER 30 DECEMBER 31
In thousands 1997 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
OPERATIONS
Net income $ 299,524 $ 157,291 $ 274,536
Adjustments to reconcile net income
to cash provided by operations:
Depreciation 132,440 134,039 126,902
Amortization of intangible assets 28,138 33,682 31,609
Other, net (18,239) (15,048) (4,973)
Changes in current assets and liabilities:
Accounts receivable 25,270 (2,045) (45,519)
Inventories 110,807 (31,881) 72,061
Accounts payable 43,196 (18,623) 14,559
Other, net 90,318 66,241 10,226
--------- --------- ---------
Cash provided by operations 711,454 323,656 479,401
INVESTMENTS
Capital expenditures (138,747) (155,206) (132,908)
Business acquisitions (24,284) (12,004) (494,751)
Other, net 36,887 4,216 1,053
--------- --------- ---------
Cash invested (126,144) (162,994) (626,606)
FINANCING
Increase (decrease) in short-term borrowings (213,746) (92,655) 282,739
Proceeds from long-term debt 15,556 98,718 99,207
Payment of long-term debt (111,522) (3,123) (222,718)
Purchase of Common Stock (61,483) (86,251) (27,878)
Cash dividends paid (97,036) (92,038) (88,223)
Proceeds from issuance of stock 67,819 36,015 8,277
Other, net 1,656 3,005 3,979
--------- --------- ---------
Cash provided (used) by financing (398,756) (136,329) 55,383
--------- --------- ---------
NET CHANGE IN CASH AND EQUIVALENTS 186,554 24,333 (91,822)
CASH AND EQUIVALENTS - BEGINNING OF YEAR 84,075 59,742 151,564
--------- --------- ---------
CASH AND EQUIVALENTS - END OF YEAR $ 270,629 $ 84,075 $ 59,742
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
VF CORPORATION
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL FOREIGN
COMMON PAID-IN CURRENCY RETAINED
In thousands STOCK CAPITAL TRANSLATION EARNINGS
------- --------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE JANUARY 1, 1994 $64,489 $543,165 $(12,865) $ 952,611
Net income - - - 274,536
Cash dividends:
Common Stock - - - (83,994)
Series B Preferred Stock - - - (4,229)
Tax benefit from Preferred Stock dividends - - - 1,082
Redemption of Preferred Stock - - - (284)
Purchase of treasury shares (588) - - (27,290)
Exercise of stock options,
net of shares surrendered 264 9,762 - (72)
Foreign currency translation, net of
$9,381 deferred income taxes - - 17,422 -
------- -------- -------- ----------
BALANCE DECEMBER 31, 1994 64,165 552,927 4,557 1,112,360
Net income - - - 157,291
Cash dividends:
Common Stock - - - (87,907)
Series B Preferred Stock - - - (4,131)
Tax benefit from Preferred Stock dividends - - - 955
Redemption of Preferred Stock - - - (507)
Restricted stock 5 (230) - 248
Purchase of treasury shares (1,720) - - (84,531)
Exercise of stock options,
net of shares surrendered 989 41,279 - (170)
Foreign currency translation, net of
$8,576 deferred income taxes - - 15,926 -
------- -------- -------- ----------
BALANCE DECEMBER 30, 1995 63,439 593,976 20,483 1,093,608
Net income - - - 299,524
Cash dividends:
Common Stock - - - (93,020)
Series B Preferred Stock - - - (4,016)
Tax benefit from Preferred Stock dividends - - - 827
Redemption of Preferred Stock - - - (1,218)
Restricted stock - 23 - -
Purchase of treasury shares (1,015) - - (60,468)
Exercise of stock options,
net of shares surrendered 1,484 74,555 - (388)
Foreign currency translation, net of
$7,568 deferred income taxes - - (14,055) -
------- -------- -------- ----------
BALANCE JANUARY 4, 1997 $63,908 $668,554 $ 6,428 $1,234,849
======= ======== ======== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
VF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1997
VF Corporation's principal business is designing, manufacturing and marketing
high quality branded jeanswear, knitwear, intimate apparel, children's playwear
and other apparel. Jeanswear and related products represent over one-half of
consolidated sales and earnings and approximately one-half of total assets. The
Company's customers are primarily department, discount and specialty stores
throughout the world. One domestic discount store group comprises 10.3% of
consolidated sales in 1996 and 10.5% in 1995.
NOTE A - ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of VF Corporation and all majority owned subsidiaries after elimination
of intercompany transactions and profits.
INVENTORIES are stated at the lower of cost or market. Inventories stated on the
last-in, first-out basis represent 29% of total 1996 inventories and 33% in
1995. Remaining inventories are valued using the first-in, first-out method.
PROPERTY AND DEPRECIATION: Property, plant and equipment are stated at cost.
Depreciation is computed by the straight-line method over the estimated useful
lives of the assets, ranging up to 40 years for buildings and 10 years for
machinery and equipment.
INTANGIBLE ASSETS represent the excess of costs over the fair value of net
tangible assets of businesses acquired, less accumulated amortization of $224.5
million and $208.4 million in 1996 and 1995. These assets are amortized on the
straight-line method over five to forty years.
The Company's policy is to evaluate intangible assets for possible impairment
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. This evaluation is based on a number of
factors, including a business unit's expectations for operating income and
undiscounted cash flows that will result from the use of such assets.
ADVERTISING COSTS are expensed as incurred and were $271.4 million in 1996,
$230.6 million in 1995 and $218.9 million in 1994.
EARNINGS PER SHARE: Primary earnings per share are computed by dividing net
income, after deducting preferred dividends, by the weighted average number of
common shares outstanding. Fully diluted earnings per share assume the
conversion of Preferred Stock and the exercise of stock options that have a
dilutive effect.
STOCK-BASED EMPLOYEE BENEFIT PLANS: Compensation expense is not recorded for
stock options granted at fair market value. For grants of restricted stock,
compensation equal to the market value of shares at the date of grant is
deferred and amortized to expense over the vesting period.
<PAGE> 7
USE OF ESTIMATES: In preparing financial statements in accordance with generally
accepted accounting principles, management makes estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
NOTE B - ACQUISITIONS
In August 1996, the Company acquired a manufacturer and marketer of flame
retardant apparel for $20.8 million. Intangible assets related to this
acquisition totaled $18.1 million. During 1995 and 1996, the Company paid a
total of $15.5 million for a company that manufactures and markets Lee branded
products in Mexico. In January 1994, the Company acquired the common stock of
H.H. Cutler Company for a total consideration of $154.7 million and the common
stock of Nutmeg Industries, Inc. for a total consideration of $352.2 million, of
which $349.1 million related to intangible assets of these companies. Both
companies manufacture and market licensed apparel.
All acquisitions have been accounted for as purchases, and accordingly the
purchase prices have been allocated to the net assets acquired based on fair
values at the dates of acquisition. The excess of cost over fair value of the
purchased businesses has been allocated to intangible assets and is being
amortized primarily over 40 years. Operating results of these companies have
been included in the consolidated financial statements since the dates of
acquisition.
NOTE C - INVENTORIES
<TABLE>
<CAPTION>
1996 1995
-------- --------
(In thousands)
<S> <C> <C>
Finished products $394,962 $514,688
Work in process 168,774 139,721
Materials and supplies 167,087 187,498
-------- --------
$730,823 $841,907
======== ========
</TABLE>
The current cost of inventories stated on the last-in, first-out method (see
Note A) is not significantly different from their value determined under the
first-in, first-out method.
<PAGE> 8
NOTE D - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
Land $ 44,244 $ 42,605
Buildings 402,635 389,135
Machinery and equipment 1,096,472 1,058,644
---------- ----------
1,543,351 1,490,384
Less accumulated depreciation 821,827 740,504
---------- ----------
$ 721,524 $ 749,880
========== ==========
NOTE E - SHORT-TERM BORROWINGS
1996 1995
---------- ----------
(In thousands)
Commercial paper $ 143,070
Banks $ 17,528 86,875
---------- ----------
$ 17,528 $ 229,945
</TABLE>
The weighted average interest rate was 12.6% at the end of 1996 and 6.6% at the
end of 1995.
The Company maintains an unsecured revolving credit agreement with a group of
banks for $750.0 million that supports commercial paper borrowings and is
otherwise available for general corporate purposes. The agreement, which extends
to 1999, requires a .12% facility fee per year and contains various financial
covenants, including minimum net worth and debt ratio requirements. At January
4, 1997, there were no borrowings under the agreement.
NOTE F - ACCRUED LIABILITIES
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
Income taxes $ 81,419 $ 44,182
Compensation 87,027 49,583
Insurance 64,247 50,805
Special charges (Note M) 16,218 66,277
Other 178,474 148,215
---------- ----------
$ 427,385 $ 359,062
========== ==========
</TABLE>
<PAGE> 9
NOTE G - LONG-TERM DEBT
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
9.50% notes, due 1999 $ 100,000
9.50% notes, due 2001 $ 100,000 100,000
6.63% notes, due 2003 100,000 100,000
7.60% notes, due 2004 100,000 100,000
6.75% notes, due 2005 100,000 100,000
9.25% debentures, due 2022 100,000 100,000
Capital leases and other 20,356 16,932
---------- ----------
520,356 616,932
Less current portion 1,298 2,715
---------- ----------
$ 519,058 $ 614,217
========== ==========
</TABLE>
The scheduled payments of long-term debt are $.6 million in each of 1998, 1999
and 2000 and $116.5 million in 2001. The Company paid interest of $62.6 million
in 1996, $74.4 million in 1995 and $83.1 million in 1994.
NOTE H - OTHER LIABILITIES
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
Deferred income taxes $ 43,131 $ 59,191
Deferred compensation 84,617 76,834
Other 36,329 33,367
---------- ----------
$ 164,077 $ 169,392
========== ==========
</TABLE>
NOTE I - BENEFIT PLANS
The Company sponsors a noncontributory defined benefit pension plan covering
substantially all full-time domestic employees. Benefits are based on employees'
compensation and years of service. The Company annually contributes amounts, as
determined by an actuary, that provide the plan with sufficient assets to meet
future benefit payments. Plan assets consist principally of common stocks, U.S.
government obligations and corporate obligations.
<PAGE> 10
The effect of the defined benefit plan on income is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 17,160 $ 14,660 $ 16,230
Interest cost on projected benefit obligation 31,060 26,409 25,639
Actual return on plan assets (38,049) (68,659) (5,193)
Net amortization and deferral 7,711 44,606 (18,124)
----------- ----------- -----------
Pension expense $ 17,882 $ 17,016 $ 18,552
=========== =========== ===========
The funded status of the defined benefit plan, based on a September 30 valuation
date, is as follows:
1996 1995
----------- -----------
(In thousands)
Present value of vested benefits $ 326,185 $ 307,952
=========== ===========
Present value of accumulated benefits $ 372,183 $ 333,846
=========== ===========
Plan assets at fair value $ 405,000 $ 358,051
Present value of projected benefits 411,295 392,112
----------- -----------
Funded status (6,295) (34,061)
Unrecognized net loss 12,387 31,526
Unrecognized net asset (7,446) (11,824)
Unrecognized prior service cost 18,208 23,195
----------- -----------
Pension asset recorded in Other Assets $ 16,854 $ 8,836
=========== ===========
</TABLE>
The projected benefit obligation was determined using an assumed discount rate
of 8.0% in 1996, 7.8% in 1995 and 8.3% in 1994. The assumption for compensation
increases was 4.5% in 1996 and 5.0% in 1995 and 1994, and the assumption for
return on plan assets was 8.8% in each year.
The Company sponsors an Employee Stock Ownership Plan (ESOP) as part of a 401(k)
savings plan covering most domestic salaried employees. Contributions made by
the Company to the 401(k) plan are based on a specified percentage of employee
contributions. Cash contributions by the Company were $5.5 million in 1996, $5.8
million in 1995 and $5.6 million in 1994. Plan expense was $5.7 million in 1996,
$6.2 million in 1995 and $6.4 million in 1994, after giving effect to
tax-deductible dividends on the Series B Preferred Stock of $4.0 million in
1996, $4.1 million in 1995 and $4.2 million in 1994.
The Company sponsors other savings and retirement plans for certain domestic and
foreign employees. Expense for these plans totaled $9.6 million in 1996, $13.3
million in 1995 and $9.7 million in 1994.
<PAGE> 11
NOTE J - CAPITAL
Common shares outstanding are net of shares held in treasury of 2,399,323 in
1996, 1,376,976 in 1995 and 2,358,675 in 1994. During 1995, 2,700,000 treasury
shares were retired.
There are 25,000,000 authorized shares of Preferred Stock, $1 par value. As of
January 4, 1997, 2,000,000 shares are designated as Series A Preferred Stock, of
which none have been issued. In addition, 2,105,263 shares are designated as
6.75% Series B Preferred Stock, which were purchased by the ESOP.
There were 1,881,515 shares of Series B Preferred Stock outstanding at January
4, 1997, 1,964,942 shares outstanding at December 30, 1995 and 2,014,427 shares
outstanding at December 31, 1994, after share redemptions.
Each outstanding share of Common Stock has one preferred stock purchase right
attached. The rights become exercisable ten days after an outside party
acquires, or makes an offer for, 20% or more of the Common Stock. Each right
entitles its holder to buy 1/100 share of Series A Preferred Stock for $100.
Once exercisable, if the Company is involved in a merger or other business
combination or an outside party acquires 20% or more of the Common Stock, each
right will be modified to entitle its holder (other than the acquiror) to
purchase common stock of the acquiring company or, in certain circumstances, VF
Common Stock having a market value of twice the exercise price of the right. In
some circumstances, rights other than those held by an acquiror may be exchanged
for one share of VF Common Stock or 1/100 share of Series A Preferred Stock. The
rights, which expire on January 13, 1998, may be redeemed at $.01 per right
prior to their becoming exercisable.
NOTE K - REDEEMABLE PREFERRED STOCK
Each share of Series B Preferred Stock has a redemption value of $30.88 plus
cumulative accrued dividends, is convertible into 8/10 share of Common Stock and
is entitled to one vote per share along with the Common Stock. The trustee for
the ESOP may convert the preferred shares to Common Stock at any time or may
cause the Company to redeem the preferred shares under certain circumstances.
The Series B Preferred Stock also has preference in liquidation over all other
stock issues.
The ESOP's purchase of the preferred shares was funded by a loan of $65.0
million from the Company that bears interest at 9.80% and is payable in
increasing installments through 2003. Interest related to this loan was $4.4
million in 1996, $4.9 million in 1995 and $5.3 million in 1994. Principal and
interest obligations on the loan are satisfied as the Company makes
contributions to the savings plan and dividends are paid on the Preferred Stock.
As principal payments are made on the loan, shares of Preferred Stock are
allocated to participating employees' accounts within the ESOP.
NOTE L - STOCK OPTIONS
The Company has granted nonqualified stock options to officers, directors and
key employees under two stock option plans at prices not less than fair market
value on the date of grant. Options become exercisable one year after the date
of grant and expire ten years after the date of grant.
<PAGE> 12
Activity in the stock option plans is summarized as follows:
<TABLE>
<CAPTION>
SHARES WEIGHTED
UNDER AVERAGE
OPTIONS EXERCISE PRICE
---------- --------------
<S> <C> <C>
Balance January 1, 1994 4,168,291 $ 44.61
Options granted 1,015,475 47.90
Options exercised (265,408) 31.57
Options canceled (178,870) 53.96
---------- ---------
Balance December 31, 1994 4,739,488 45.69
Options granted 1,088,775 52.00
Options exercised (992,710) 36.42
Options canceled (73,504) 50.83
---------- ---------
Balance December 30, 1995 4,762,049 48.99
Options granted 361,105 68.94
Options exercised (1,491,288) 45.74
Options canceled (171,225) 49.72
---------- ---------
Balance January 4, 1997 3,460,641 $ 52.43
==========
</TABLE>
Stock options outstanding at January 4, 1997 are summarized as follows:
<TABLE>
<CAPTION>
RANGE OF WEIGHTED AVERAGE WEIGHTED
EXERCISE NUMBER REMAINING AVERAGE
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE
- -------- ----------- ---------------- --------------
<C> <C> <C> <C>
$16-20 23,850 3.9 years $ 16.19
21-30 34,300 1.7 years 27.53
31-40 218,415 4.4 years 35.48
41-50 885,271 7.5 years 46.77
51-60 1,937,700 7.3 years 54.74
61-69 361,105 9.9 years 68.94
- ------ --------- --------- ------
$16-69 3,460,641 7.4 years $ 52.43
=========
</TABLE>
All above options are exercisable except for those granted in 1996. There are
36,595 options available for future grants. In December 1996 the Board of
Directors adopted the 1996 Stock Compensation Plan, subject to shareholder
approval at the April 1997 Annual Meeting. Under the 1996 plan, there are an
additional 621,595 options that have been granted at $69.00 per share, subject
to shareholder approval of the new plan.
The Company has not recognized compensation expense in connection with stock
options grants under the plans. However, had compensation expense been
determined based on the fair value of the options on the grant dates, the
Company's pro forma net income and both primary and fully diluted earnings per
<PAGE> 13
share for 1996 would have been reduced by $6.9 million or $.11 per share.
Because options are granted late in the year, the pro forma expense for 1995
would not be meaningful and is therefore not presented.
The fair value of options granted during 1996 was $15.95 per share and of
options granted during 1995 was $10.98 per share. Fair value is estimated based
on the Black-Scholes option-pricing model with the following assumptions for
grants in 1996 and 1995: dividend yield of 2.5%; expected volatility of 20%;
risk-free interest rates of 6.5% in 1996 and 5.4% in 1995; and expected lives of
5 years.
The Company has granted to a key employee 5,253 shares of restricted stock that
vest in the year 2005. The Company has 300,000 shares available for future
grants under the 1995 Key Employee Restricted Stock Plan.
NOTE M - SPECIAL CHARGES
During the fourth quarter of 1995, the Company recorded special charges totaling
$155.9 million ($1.61 per share) to address changes in consumer buying habits
and the increasingly competitive retail environment that have occurred in the
apparel industry. These charges were aimed at reducing the Company's overall
cost structure, including both manufacturing and administrative costs, through
the closure of higher cost manufacturing facilities and personnel reductions in
administrative positions. In addition, included in the charges were provisions
related to better align inventories to existing retailer and consumer
requirements.
These actions affected approximately 7,700 of the Company's employees in
manufacturing and headquarters locations throughout North America and Europe.
Charges related to personnel reductions, including severance and related
benefits, totaled $46.9 million. Of this amount, $6.7 million was paid in 1995
and $33.3 million was paid in 1996 to approximately 6,200 employees who have
been terminated. The remainder of the employees included in the cost reduction
initiatives are located at manufacturing and other facilities that are still in
the closure process. Remaining cash payments of $6.9 million will be made to
those employees during 1997.
The remaining $109.0 million of the 1995 special provisions included noncash
charges of $59.9 million for asset write-offs for closed manufacturing
facilities and business and inventory realignments and $49.1 million for
expected cash charges for lease and other contract terminations. Cash payments
totaled $23.0 million in 1995 and $16.8 million in 1996. Remaining cash payments
totaling $9.3 million relate to asset disposition and contract and lease
termination costs to be paid in 1997.
The special charges were recorded in the 1995 consolidated statement of income
as follows: Cost of Products Sold - $109.8 million; Marketing, Administrative
and General Expenses - $41.7 million; Miscellaneous and Other Operating Expenses
- - $4.4 million.
NOTE N - INCOME TAXES
<PAGE> 14
The provision for income taxes is computed based on the following amounts of
income before income taxes:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Domestic $ 433,959 $ 261,437 $ 409,806
Foreign 74,449 22,698 45,855
--------- --------- ---------
$ 508,408 $ 284,135 $ 455,661
========= ========= =========
</TABLE>
The provision for income taxes consists of:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 179,217 $ 136,863 $ 149,000
Foreign 43,493 32,535 24,649
State 15,894 11,299 12,978
--------- --------- ---------
238,604 180,697 186,627
Deferred, primarily federal (29,720) (53,853) (5,502)
--------- --------- ---------
$ 208,884 $ 126,844 $ 181,125
========= ========= =========
</TABLE>
The reasons for the difference between income taxes computed by applying the
statutory federal income tax rate and income tax expense in the financial
statements are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Tax at federal statutory rate $ 177,943 $ 99,448 $ 159,481
State income taxes, net of federal tax benefit 10,331 7,344 8,436
Amortization of intangible assets 7,091 7,319 7,126
Foreign operating losses
with no current benefit 7,109 11,169 2,302
Other, net 6,410 1,564 3,780
--------- --------- ---------
$ 208,884 $ 126,844 $ 181,125
========= ========= =========
</TABLE>
<PAGE> 15
Deferred income tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
(In thousands)
<S> <C> <C>
Deferred income tax assets:
Employee benefits $ 42,582 $ 39,567
Other accrued expenses 93,922 82,453
Inventories 21,934 19,603
Operating loss carryforwards 32,760 27,018
--------- ---------
191,198 168,641
Valuation allowance (29,296) (22,154)
--------- ---------
$ 161,902 $ 146,487
========= =========
Deferred income tax liabilities:
Depreciation $ 58,848 $ 62,473
Inventories 21,596 22,492
Foreign currency translation 3,461 11,030
Unremitted foreign earnings 6,735 11,373
Other 16,461 6,349
--------- ---------
$ 107,101 $ 113,717
========= =========
</TABLE>
The Company has $77.4 million of foreign operating loss carryforwards expiring
at various dates; a valuation allowance has been provided where it is more
likely than not that the deferred tax assets relating to certain of those loss
carryforwards will not be realized. Income taxes paid were $177.4 million in
1996, $172.0 million in 1995 and $177.0 million in 1994.
NOTE O - OPERATIONS BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Net sales:
United States $ 4,203,675 $ 4,192,435 $ 4,209,090
Foreign 933,503 869,864 762,623
----------- ----------- -----------
$ 5,137,178 $ 5,062,299 $ 4,971,713
=========== =========== ===========
Operating income:
United States $ 481,684 $ 328,878 $ 493,922
Foreign 111,064 59,173 75,253
----------- ----------- -----------
592,748 388,051 569,175
Corporate expenses (35,465) (40,661) (38,669)
Interest, net (49,387) (66,217) (70,984)
Miscellaneous, net 512 2,962 (3,861)
----------- ----------- -----------
Income before income taxes $ 508,408 $ 284,135 $ 455,661
=========== =========== ===========
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Identifiable assets:
United States $2,546,162 $2,672,864 $2,632,079
Foreign 646,410 684,426 610,543
Corporate 256,963 89,781 92,986
---------- ---------- ----------
$3,449,535 $3,447,071 $3,335,608
========== ========== ==========
</TABLE>
Foreign operations are conducted primarily in Europe. Foreign operations located
elsewhere are not significant. Corporate assets consist primarily of cash and
cash equivalents. The 1995 special charges (Note M) were incurred as follows:
United States - $127.1 million; Foreign - $22.9 million; Corporate - $2.9
million; Miscellaneous - $3.0 million.
NOTE P - LEASES
The Company leases certain facilities and equipment under noncancelable
operating leases. Rental expense was $67.0 million in 1996, $70.4 million in
1995 and $55.5 million in 1994. Future minimum lease payments are $45.6 million,
$35.5 million, $26.3 million, $22.5 million and $19.4 million for the years 1997
through 2001 and $57.2 million thereafter.
NOTE Q - CONTINGENCIES
The Company has certain contingent liabilities resulting from legal proceedings
and claims arising in the ordinary course of business. Management believes that
the probable resolution of such contingencies will not have a material adverse
effect on the financial position of the Company.
NOTE R - FINANCIAL INSTRUMENTS
The following represents the carrying amount and fair value of financial
instruments included in the balance sheets:
<TABLE>
<CAPTION>
1996 1995
------------------- ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ----- -------- -----
(In thousands)
<S> <C> <C> <C> <C>
Financial liabilities:
Short-term borrowings $ 17,528 $ 17,528 $229,945 $229,945
Long-term debt 519,058 537,698 614,217 668,108
Series B Preferred Stock 58,092 101,602 60,667 82,921
</TABLE>
The fair value of the Company's short-term and long-term debt is estimated 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.
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
ANALYSIS OF OPERATIONS
The Company's earnings in 1996 reflect the benefits from actions taken in late
1995 (refer to Note M to the consolidated financial statements) to (1) close a
number of higher cost domestic manufacturing facilities and move a greater
percentage of our manufacturing to lower cost offshore locations, (2) effect
reductions in selling and administrative expenses and (3) reinvest a significant
portion of the savings from these actions in increased advertising and other
actions to support and build our brands. These initiatives, along with
substantially improved inventory positions, contributed substantially to the
Company's achievement of record levels of earnings and cash generation in 1996.
Net sales in 1996 increased by 1% over 1995. Unit sales declined by 2%,
but average prices increased, primarily due to changes in product mix. Net sales
in 1995 increased by 2% over 1994 on flat unit sales. The sales dollar increase
resulted from modest price increases and the impact of a weaker U.S. dollar in
translating foreign currencies.
Gross margins were 32.7% of sales in 1996, compared with 29.3% in 1995
and 31.9% in 1994. Gross margins in 1995 included $109.8 million of special
charges; excluding these charges, 1995 gross margins were 31.5%. The margin
improvement in 1996 over the prior two years, after excluding the special
charges in 1995, resulted from lower manufacturing costs attributable to the
cost reduction initiatives of late 1995 and, particularly in relation to 1995,
lower provisions for inventory write-downs and manufacturing plant downtime.
Marketing, administrative and general expenses were 21.8% of sales in
1996, compared with 22.3% and 21.0% in 1995 and 1994, respectively. Excluding
special charges of $41.7 million in 1995, expenses were 21.5% of sales. During
1996, administrative expenses declined as
<PAGE> 18
a result of the cost reduction initiatives undertaken in late 1995, but
marketing and promotional expenses increased as a result of the Company's
decision to invest more heavily in brand support. The increase in 1995 over
1994, after excluding the special charges, was due to increased advertising and
other marketing expenses on lower than expected sales.
Other operating income and expense includes goodwill amortization
expense, offset by net royalty income. Royalty income increased over the three
year period, while amortization of goodwill declined in 1996 from expiring
amortization periods.
Net interest expense declined significantly in 1996 as the high level
of cash generated from operations was used to reduce borrowings. Net interest
expense declined slightly in 1995 from 1994 due to a lower borrowing level.
The effective income tax rate was 41.1% in 1996, 44.6% in 1995 and
39.7% in 1994. The increase in rate over 1994 is primarily due to a higher level
of foreign operating losses with no current tax benefit. The rate in 1995 was
unusually high due to the amounts of nondeductible foreign operating losses and
goodwill expense in relation to the low level of income before income taxes.
- -OPERATING RESULTS BY BUSINESS GROUP-
The Jeanswear business group includes the Lee, Wrangler, Rustler and Riders
brands in the United States and the Lee, Wrangler and Maverick brands in
international markets, primarily in Europe. International sales have been
growing at a higher rate than in the United States. Jeanswear operating income
in 1995 includes $54.8 million of special charges related to both domestic and
international operations. The operating income improvement in 1996 over the
prior two years, after excluding special charges in 1995, resulted from lower
manufacturing and other product costs, both domestically and abroad.
<PAGE> 19
The Decorated Knitwear business group consists of the Lee Sport and
Nutmeg sports apparel brands, JanSport imprinted apparel, and private label and
printwear fleece and T-shirt operations. Sales increased in 1996 due to higher
private label fleece and T-shirt volume. Operating income increased
substantially in 1996 over the two prior years, even after excluding $28.7
million of special charges in 1995. In addition to higher sales volume, this
increase resulted from improved operating margins within the sports apparel
businesses.
The Intimate Apparel business group includes the Vanity Fair and
Vassarette brands as well as a private label business in the United States,
along with a number of brands in Europe, primarily in France and Spain. Sales
declined in 1996 in both the United States and Europe. The operating loss in
1995 includes $45.4 million in special charges. Otherwise, the declines in
operating income have been primarily volume related.
The Playwear business group consists of the Healthtex brand, the
preschool sizes of Lee and Wrangler, Nike licensed products and playwear and
sleepwear products imprinted with characters licensed from The Walt Disney
Company and others. Operating income in the business group in 1995 was impacted
by $12.7 million in special charges. The overall decline in this category from
1994 resulted from manufacturing and operating difficulties along with continued
pricing pressures at retail.
The Specialty Apparel business group includes Red Kap occupational
apparel, Jantzen swim and casual apparel and JanSport brand daypacks and
equipment. Sales grew in each brand in 1996. Sales in the business group
declined in 1995 as a result of the discontinuation of the Jantzen men's
sportswear and sweater businesses. Operating income increased in each brand in
1996, even after excluding $6.9 million of special charges in 1995.
ANALYSIS OF FINANCIAL CONDITION
In managing its capital structure, VF balances financial leverage with equity to
reduce its overall cost of capital, while providing the flexibility to pursue
investment opportunities that may become
<PAGE> 20
available. It is management's goal to maintain a debt to capital ratio of less
than 40%. Our debt to capital ratio was within these guidelines: 21.4% at the
end of 1996 and 32.3% at the end of 1995. Despite our stated goal, we will
exceed this level if warranted by appropriate investment opportunities.
- -BALANCE SHEETS-
Accounts receivable was lower at the end of 1996 than 1995, despite higher
fourth quarter sales. The timing of our fiscal year-end in 1996 provided for an
additional week of cash collections in January.
Inventories are lower at the end of 1996, reflecting improvements in
inventory management and controls. Total inventories are at their lowest level
since 1991.
All domestic short-term borrowings were repaid during 1996 from the
strong cash flow from operations. The remaining balance in short-term borrowings
represents amounts due to international lenders only. In addition, during 1996,
the Company called for redemption $100 million of its long-term debt originally
due in 1999. No further debt reductions were made in 1996, despite cash
availability, as there are no long-term debt maturities until the year 2001.
Over 18% of our 1996 sales and operating income were derived from
international locations. VF's financial position and operating results can be
influenced by economic conditions in countries where VF conducts business and by
changing foreign currency exchange rates. VF does not hedge the translation of
foreign currencies into the U.S. dollar, but we do enter into foreign currency
forward contracts to minimize the effect of fluctuating foreign currencies on
cash flows from foreign operations. These contracts are not material.
<PAGE> 21
- -LIQUIDITY AND CASH FLOW-
Working capital increased in 1996, and the current ratio increased to 2.2 to 1
from 1.9 to 1 in 1995 due to the high cash and low short-term debt levels at the
end of 1996.
Cash provided by operations was a record $711 million for 1996,
resulting from higher net income, reduced accounts receivable and inventory
levels and an increase in current liabilities. The 1995 amount was lower than
1994 because of lower net income and an increase in working capital
requirements.
Capital expenditures were $139 million in 1996, compared with $155
million and $133 million in 1995 and 1994, respectively. Capital expenditures in
1997 should be somewhat higher than the level of the past three years and are
expected to be funded by cash flows from operations. Beginning in late 1994 and
continuing through 1996, the Company purchased 3.3 million shares of its Common
Stock in open market transactions for a total of $175 million. Of these totals,
one million shares were purchased for $61 million during 1996. Under the most
recent authorization of the Board of Directors for share repurchase, the Company
can purchase up to an additional 4.7 million shares.
Cash dividends totaled $1.46 per common share in 1996, compared with
$1.38 in 1995 and $1.30 in 1994. The dividend payout rate was 31% in 1996,
compared with 57% in 1995 due to lower earnings and 31% in 1994. The indicated
annual dividend rate for 1997 is $1.52 per share. VF has paid dividends on its
Common Stock annually since 1941 and intends to maintain a long-term payout rate
of 30%.
The Company's strong financial position, including existing cash,
unused credit lines and a low debt ratio, provides substantial capacity to meet
investment opportunities that may arise.
<PAGE> 22
- -OTHER MATTERS-
The Company is a defendant in an action initiated in 1990 alleging infringement
of a patent allegedly relating to a process, commonly called "acid wash," used
in the production of certain denim garments. Similar actions have been brought
against other denim apparel manufacturers. The Company is vigorously contesting
the action and believes that it has numerous substantive defenses. No trial date
has been ordered. Based on currently available information and the advice of
counsel, management is not in a position to determine the likelihood of the
outcome of the action with certainty. Notwithstanding, management believes at
this time that the outcome will not have a material impact on the financial
position of the Company.
<PAGE> 23
QUARTERLY RESULTS OF OPERATIONS
In thousands, except per share amounts
<TABLE>
<CAPTION>
EARNINGS PER COMMON SHARE DIVIDENDS PER
NET SALES GROSS PROFIT NET INCOME PRIMARY FULLY DILUTED COMMON SHARE
---------- ------------ ---------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1996
FIRST QUARTER $1,158,123 $ 380,517 $ 55,930 $ .86 $ .85 $ .36
SECOND QUARTER 1,220,997 396,319 69,892 1.08 1.06 .36
THIRD QUARTER 1,380,919 446,358 91,048 1.42 1.39 .36
FOURTH QUARTER 1,377,139 455,818 82,654 1.28 1.25 .38
---------- ---------- -------- ----- ----- -----
$5,137,178 $1,679,012 $299,524 $4.64 $4.54 $1.46
========== ========== ======== ===== ===== =====
1995
First quarter $1,187,587 $ 388,439 $ 57,953 $ .89 $ .87 $ .34
Second quarter 1,271,936 400,924 65,237 1.01 .99 .34
Third quarter 1,332,102 412,552 69,718 1.08 1.05 .34
Fourth quarter 1,270,674 282,829 (35,617)* (0.57)* (0.57)* .36
---------- ---------- -------- ----- ----- -----
$5,062,299 $1,484,744 $157,291 $2.41 $2.37 $1.38
========== ========== ======== ===== ===== =====
1994
First quarter $1,123,035 $ 362,612 $ 52,898 $ .81 $ .79 $ .32
Second quarter 1,186,324 380,175 58,916 .90 .88 .32
Third quarter 1,373,037 442,077 87,804 1.34 1.31 .32
Fourth quarter 1,289,317 399,554 74,918 1.15 1.12 .34
---------- ---------- -------- ----- ----- -----
$4,971,713 $1,584,418 $274,536 $4.20 $4.10 $1.30
========== ========== ======== ===== ===== =====
</TABLE>
* Special charges of $155.9 million reduced net income by $102.5 million ($1.61
per share). See Note M to Consolidated Financial Statements.
<PAGE> 24
SALES AND OPERATING INCOME BY BUSINESS GROUP (Unaudited)
<TABLE>
<CAPTION>
In thousands Fiscal year ended JANUARY 4, 1997 December 30, 1995 December 31, 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES
Jeanswear $ 2,754,039 $ 2,664,930 $ 2,547,131
Decorated Knitwear 637,982 619,932 623,272
Intimate Apparel 650,197 729,149 724,462
Playwear 382,382 371,717 367,508
Specialty Apparel 712,578 676,571 709,340
- --------------------------------------------------------------------------------------------------
$ 5,137,178 $ 5,062,299 $ 4,971,713
- --------------------------------------------------------------------------------------------------
OPERATING INCOME
Jeanswear $ 395,591 $ 311,688 $ 372,392
Decorated Knitwear 52,362 8,039 32,423
Intimate Apparel 39,947 (778) 60,349
Playwear 12,342 2,745 36,457
Specialty Apparel 92,160 72,421 75,851
- --------------------------------------------------------------------------------------------------
592,402 394,115 577,472
OTHER OPERATING (EXPENSE) INCOME 347 (6,064) (8,297)
CORPORATE EXPENSES (35,466) (40,661) (38,669)
- --------------------------------------------------------------------------------------------------
$ 557,283 $ 347,390 $ 530,506
==================================================================================================
</TABLE>
<PAGE> 25
QUARTERLY COMMON STOCK PRICE INFORMATION
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
High Low High Low High Low
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
First quarter $56 3/4 $47 5/8 $53 1/8 $47 1/8 $51 7/8 $44 1/2
Second quarter 63 3/8 53 3/4 53 3/4 50 1/2 53 3/4 46
Third quarter 62 3/8 52 1/2 57 1/8 48 52 7/8 46 1/2
Fourth quarter 69 7/8 59 53 5/8 46 3/4 51 5/8 44 1/4
</TABLE>
<PAGE> 26
VF CORPORATION 1996 FINANCIAL SUMMARY
<TABLE>
<CAPTION>
In thousands, except per share amounts 1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 5,137,178 $ 5,062,299 $ 4,971,713
Cost of products sold 3,458,166 3,577,555 3,387,295
------------ ------------ ------------
Gross profit 1,679,012 1,484,744 1,584,418
Marketing, administrative and other 1,121,729 1,137,354 1,053,912
------------ ------------ ------------
Operating income 557,283 347,390 530,506
Interest, net (49,387) (66,217) (70,984)
Miscellaneous, net 512 2,962 (3,861)
------------ ------------ ------------
Income before income taxes 508,408 284,135 455,661
Income taxes 208,884 126,844 181,125
------------ ------------ ------------
Net income $ 299,524 $ 157,291 $ 274,536
------------ ------------ ------------
Per share of Common Stock (1)
Earnings - primary $ 4.64 $ 2.41 $ 4.20
Dividends 1.46 1.38 1.30
Average number of common shares outstanding 63,646 63,743 64,620
Net income as % of average common shareholders'
equity 16.2% 8.8% 16.8%
Net income as % of average total assets 8.6% 4.4% 7.9%
------------ ------------ ------------
FINANCIAL POSITION
Accounts receivable, net $ 592,942 $ 629,506 $ 613,337
Inventories 730,823 841,907 801,338
Total current assets 1,706,326 1,667,637 1,551,166
Property, plant and equipment, net 721,524 749,880 767,011
Total assets 3,449,535 3,447,071 3,335,608
Total current liabilities 766,267 868,320 912,332
Long-term debt 519,058 614,217 516,700
Common shareholders' equity 1,973,739 1,771,506 1,734,009
------------ ------------ ------------
OTHER STATISTICS
Working capital $ 940,059 $ 799,317 $ 638,834
Current ratio 2.2 1.9 1.7
Debt to total capital ratio (2) 21.4% 32.3% 32.7%
Dividends $ 97,036 $ 92,038 $ 88,223
Purchase of Common Stock 61,483 86,251 27,878
Cash provided by operations 711,454 323,656 479,401
Capital expenditures (excluding acquisitions) 138,747 155,206 132,908
Depreciation and amortization 160,578 167,721 158,511
------------ ------------ ------------
MARKET DATA
Market price range (1) $69 7/8 - 47 5/8 $57 1/8 - 46 3/4 $53 3/4 - 44 1/4
Book value per common share (1) 30.88 27.92 27.02
Price earnings ratio -- high-low 15.1 - 10.3 23.7 - 19.4 12.8 - 10.5
Rate of payout (3) 31.5% 57.3% 31.0%
</TABLE>
<TABLE>
<CAPTION>
In thousands, except per share amounts 1993 1992
------------ ------------
<S> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 4,320,404 $ 3,824,449
Cost of products sold 2,974,861 2,603,726
------------ ------------
Gross profit 1,345,543 1,220,723
Marketing, administrative and other 911,063 788,216
------------ ------------
Operating income 434,480 432,507
Interest, net (37,387) (53,615)
Miscellaneous, net 2,894 (3,119)
------------ ------------
Income before income taxes 399,987 375,773
Income taxes 153,572 138,742
------------ ------------
Net income $ 246,415 $ 237,031
============ ============
Per share of Common Stock (1)
Earnings - primary $ 3.80 $ 3.97
Dividends 1.22 1.11
Average number of common shares outstanding 64,011 58,608
Net income as % of average common shareholders'
equity 16.9% 23.0%
Net income as % of average total assets 8.5% 9.7%
------------ ------------
FINANCIAL POSITION
Accounts receivable, net $ 511,887 $ 493,030
Inventories 778,767 742,474
Total current assets 1,500,180 1,365,573
Property, plant and equipment, net 712,759 711,087
Total assets 2,877,348 2,712,380
Total current liabilities 659,848 684,002
Long-term debt 527,573 767,641
Common shareholders' equity 1,547,400 1,153,971
------------ ------------
OTHER STATISTICS
Working capital $ 840,332 $ 681,571
Current ratio 2.3 2.0
Debt to total capital ratio (2) 30.3% 44.8%
Dividends $ 82,831 $ 69,552
Purchase of Common Stock - -
Cash provided by operations 293,751 123,060
Capital expenditures (excluding acquisitions) 209,494 207,202
Depreciation and amortization 125,765 108,281
------------ ------------
MARKET DATA
Market price range (1) $56 1/2 - 39 1/2 $57 1/2 - 38 1/2
Book value per common share (1) 23.99 19.39
Price earnings ratio -- high-low 14.9 - 10.4 14.5 - 9.7
Rate of payout (3) 32.1% 28.0%
</TABLE>
(1) Per share computations and market price ranges have been adjusted to reflect
two-for-one stock split in April 1986.
(2) Capital is defined as common shareholders' equity plus short-term and
long-term debt.
(3) Dividends per share divided by earnings per share.
<PAGE> 27
VF BRANDS
<TABLE>
<CAPTION>
CHANNEL OF JEANSWEAR INTIMATE DECORATED PLAYWEAR SPECIALTY
DISTRIBUTION APPAREL KNITWEAR APPAREL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEPARTMENT Lee Vanity Fair Lee Sport Healthtex JanSport
STORES Marithe & Nutmeg Lee Jantzen
Francois Nike* Nike*
Girbaud*
Joe Boxer*
- ------------------------------------------------------------------------------------------------------------------------------------
DISCOUNT Wrangler Vassarette Cutler Cutler Wolf Creek
STORES Riders Sports Wrangler Big Ben
Rustler
Timber Creek
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIALTY Wrangler Nutmeg JanSport
STORES Western JanSport Nike*
Rugged Wear Red Kap
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL Lee Lou Nutmeg
Wrangler Bolero
Maverick Carina
Variance
Siltex
Belcor
Intima Cherry
Gemma
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*licensed
<PAGE> 1
Exhibit 21
VF CORPORATION
SUBSIDIARIES OF THE CORPORATION
FOLLOWING IS A LISTING OF THE SIGNIFICANT SUBSIDIARIES OF THE CORPORATION, ALL
OF WHICH ARE WHOLLY OWNED:
<TABLE>
<CAPTION>
Name Jurisdiction of Organization
====================================== ===========================================
<S> <C>
Bassett-Walker Apparel Corp. Delaware
Bassett-Walker, Inc. Virginia
H.H. Cutler Company Michigan
D. J. Industries, Inc. Delaware
Healthtex, Inc. Delaware
Healthtex Apparel Corp. Delaware
JanSport, Inc. Delaware
JanSport Apparel Corp. Delaware
Jantzen Inc. Nevada
Jantzen Apparel Corp. Delaware
Lee Apparel Company, Inc. Pennsylvania
Lee Apparel (UK) Ltd. N. Ireland
The H. D. Lee GmbH Germany
The H. D. Lee Company, Inc. Delaware
Lee Europe N.V. Belgium
Lee Italia Srl Italy
Les Dessous Boutique Diffusion S.A. France
Nutmeg Industries, Inc. Florida
Red Kap Industries, Inc. Delaware
Red Kap Apparel Corp. Delaware
VF Factory Outlet, Inc. Delaware
VF Diffusion, SNC France
Vanity Fair, Inc. Delaware
Vanity Fair Intimates, Inc. Alabama
Vives Vidal, Vivesa, S.A. Spain
Wrangler Limited United Kingdom
Wrangler Germany GmbH Germany
Wrangler Apparel Corp. Delaware
Wrangler, Inc. Alabama
Wrangler Clothing Corp. Delaware
</TABLE>
Excludes subsidiaries which, if considered as a single subsidiary or after
taking into account the elimination of intercompany accounts, would not
constitute a significant subsidiary at January 4, 1997.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS FOR FORM 10-K
We hereby consent to the incorporation by reference in (1) Registration
Statement No. 33-55014, which acts as Post-Effective Amendment No. 2 to
Registration Statement No. 33-26566 on Form S-8/S-3, and Post-Effective
Amendment No. 6 to Registration Statement No. 2-85579 on Form S-8/S-3; (2)
Registration Statement No. 33-33621 on Form S-8, which acts as Post-Effective
Amendment No. 2 to Registration Statement No. 2-99945 on Form S-8; (3)
Registration Statement No. 33-10491 on Form S-3; (4) Registration Statement No.
33-41241 on Form S-8; and (5) Registration Statement No. 33-53231 on Form S-3
of our report dated February 6, 1997 on our audits of the consolidated
financial statements of VF Corporation as of January 4, 1997 and December 30,
1995, and for the years then ended, appearing on page 21 of the 1996 Annual
Report of Shareholders, which is incorporated in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our report on the
consolidated financial statement schedule, which appears on page 19 of this
Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
March 24, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS FOR FORM 11-K
We hereby consent to the incorporation by reference in (1) Registration
Statement No. 33-55014, which acts as Post-Effective Amendment No. 2 to
Registration Statement No. 33-26566 on Form S-8/S-3, and Post-Effective
Amendment No. 6 to Registration Statement No. 2-85579 on Form S-8/S-3; (2)
Registration Statement No. 33-33621 on Form S-8, which acts as Post-Effective
Amendment No. 2 to Registration Statement No. 2-99945 on Form S-8, of our
report dated March 10, 1997 on our audits of the financial statements of the VF
Corporation Tax-Advantaged Savings Plan for Salaried Employees as of December
31, 1996 and December 31, 1995 and for the years then ended included in the Form
11-K, which is filed as Exhibit 99(A) to this Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
March 24, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS ON FORM 10-K
We consent to the incorporation by reference in (1) Registration Statement No.
33-55014, which acts as Post-Effective Amendment No. 2 to Registration
Statement No. 33-26566 on Form S-8/S-3, and Post-Effective Amendment No. 6 to
Registration Statement No. 2-85579 on Form S-8/S-3; (2) Registration Statement
No. 33-33621 on Form S-8, which acts as Post-Effective Amendment No. 2 to
Registration Statement No. 2-99945 on Form S-8; (3) Registration Statement No.
33-10491 on Form S-3; (4) Registration Statement No. 33-41241 on Form S-8; and
(5) Registration Statement No. 33-53231 on Form S-3 of our report dated
February 8, 1995, with respect to the consolidated statements of income, cash
flows, and common shareholders' equity and the financial statement schedule (as
it pertains to 1994) of VF Corporation for the fiscal year ended December 31,
1994 incorporated by reference in this Annual Report on Form 10-K for the year
ended January 4, 1997.
/s/ Ernst & Young LLP
Reading, Pennsylvania
March 24, 1997
CONSENT OF INDEPENDENT AUDITORS ON FORM 11-K
We consent to the incorporation by reference in (1) Registration Statement No.
33-55014, which acts as Post-Effective Amendment No. 2 to Registration
Statement No. 33-26566 on Form S-8/S-3 and Post-Effective Amendment No. 6 to
Registration Statement No. 2-85579 on Form S-8/S-3 (2) Registration Statement
No. 33-33621 on Form S-8, which acts as Post-Effective Amendment No. 2 to
Registration Statement No. 2-99945 on Form S-8, of our report dated March 10,
1995, with respect to the statement of changes in net assets available for
benefits of the VF Corporation Tax-Advantaged Savings Plan for Salaried
Employees for the year ended December 31, 1994 included in the Annual Report on
Form 11-K for the year ended December 31, 1994.
/s/ Ernst & Young LLP
Reading, Pennsylvania
March 24, 1997
<PAGE> 1
Exhibit 23.3
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
VF Corporation
We have audited the accompanying consolidated statements of income, cash flows,
and common shareholders' equity for the fiscal year ended December 31, 1994.
Our audit also included the financial statement schedule (as it pertains to
1994) as listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
VF Corporation for the fiscal year ended December 31, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic 1994
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
Reading, Pennsylvania
February 8, 1995
<PAGE> 1
Exhibit 23.4
REPORT OF INDEPENDENT ACCOUNTANTS ON
1995 AND 1996 FINANCIAL STATEMENT SCHEDULE
Board of Directors and Shareholders
VF Corporation
Our report on the 1995 and 1996 consolidated financial statements of VF
Corporation has been incorporated by reference in this Form 10-K from page 21
of the 1996 Annual Report to Shareholders of VF Corporation. In connection
with our audits of such consolidated financial statements, we have also audited
the related consolidated financial statement schedule listed in Item 14(a)2 on
page 13 of this Form 10-K.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
February 6, 1997
<PAGE> 1
Exhibit 23.5
REPORT OF INDEPENDENT AUDITORS
VF Corporation Pension Plan Committee
VF Corporation Tax-Advantaged Plan
for Salaried Employees
We have audited the accompanying statement of changes in net assets available
for benefits of the VF Corporation Tax-Advantaged Savings Plan for Salaried
Employees for the year ended December 31, 1994. This financial statement is
the responsibility of the Plan's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the changes in net assets available for benefits of the
VF Corporation Tax-Advantaged Savings Plan for Salaried Employees for the year
ended December 31, 1994, in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the financial
statement taken as a whole. The Fund Information in the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the changes in net assets available for
benefits of each fund. The Fund Information has been subjected to the auditing
procedures applied in our audit of the financial statement and, in our opinion,
is fairly stated in all material respects in relation to the financial
statement taken as a whole.
/s/ Ernst & Young LLP
Reading, Pennsylvania
March 10, 1995
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that V.F. Corporation and the
undersigned directors and officers of V.F. Corporation do hereby constitute and
appoint G. G. Johnson, L. M. Tarnoski and R. K. Shearer, and each of them, true
and lawful attorneys-in-fact of the undersigned to execute on their behalf the
Annual Report of V.F. Corporation on Form 10-K (including any amendments
thereof) of the Securities and Exchange Commission for the fiscal year of V.F.
Corporation ended January 7, 1997.
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Power of Attorney this 11th day of February, 1997.
<TABLE>
<S> <C>
ATTEST: V.F. CORPORATION
/s/ L. M. Tarnoski By: /s/ Mackey J. McDonald
- ------------------------------------------- ---------------------------------------------
L. M. Tarnoski Mackey J. McDonald, President and Chief
Secretary Executive Officer
Principal Executive Officer: Principal Financial Officer:
/s/ Mackey J. McDonald /s/ G. G. Johnson
- ------------------------------------------- ---------------------------------------------
Mackey J. McDonald, President, G. G. Johnson, Vice President-Finance
Chief Executive Officer and Director and Chief Financial Officer
Principal Accounting Officer:
/s/ R. K. Shearer
- -------------------------------------------
R. K. Shearer, Vice President - Controller
/s/ Robert D. Buzzell /s/ Edward E. Crutchfield
- ------------------------------------------- ---------------------------------------------
Robert D. Buzzell, Director Edward E. Crutchfield, Director
/s/ Ursula F. Fairbairn /s/ Barbara S. Feigin
- ------------------------------------------- ---------------------------------------------
Ursula F. Fairbairn, Director Barbara S. Feigin, Director
/s/ Roger S. Hillas /s/ Leon C. Holt, Jr.
- ------------------------------------------- ---------------------------------------------
Roger S. Hillas, Director Leon C. Holt, Jr., Director
/s/ Robert J. Hurst /s/ L. R. Pugh
- ------------------------------------------- ---------------------------------------------
Robert J. Hurst, Director L. R. Pugh, Director
/s/ William E. Pike /s/ L. Dudley Walker
- ------------------------------------------- ---------------------------------------------
William E. Pike, Director L. Dudley Walker, Director
/s /M. Rust Sharp
- -------------------------------------------
M. Rust Sharp, Director
</TABLE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
Commission file number: 1-5256
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
(Full title of plan)
1047 NORTH PARK ROAD
WYOMISSING, PA 19610
(Address of principal executive offices)
(610) 378-1151
(Registrant's telephone number, including area code)
1
<PAGE> 2
Item 1. Changes in the Plan
There were no changes in the Plan.
Item 2. Changes in Investment Policy
There were no changes in investment policy.
Item 3. Contributions Under the Plan
Contributions made by VF Corporation (the Corporation) are measured by
reference to the employees' contributions and are not discretionary.
Item 4. Participating Employees
There were approximately 7,210 enrolled participants in the Plan as of December
31, 1996, out of approximately 7,782 eligible employees.
Item 5. Administration of the Plan
(a) The Plan provides that a Committee of three persons be appointed to
administer the Plan. The Committee, the VF Corporation Pension Plan
Committee, is comprised of the following officers of the Corporation:
Lori M. Tarnoski, Vice President - Secretary; Frank C. Pickard III,
Vice President - Treasurer; and Louis J. Fecile, Vice President -
Employee Benefits. All committee persons are located at the
Corporation's headquarters: 1047 North Park Road, Wyomissing, PA
19610. Each of these individuals is an employee of the Corporation.
The Committee has the power to adopt rules and regulations for
carrying out and administering the Plan and has the full authority and
power to construe, interpret and administer the Plan. Committee
members receive no compensation from the Plan.
(b) All expenses of administration of the Plan, including Trustee fees,
are paid by the Corporation.
Item 6. Custodian of Investments
(a) The Corporation has entered into a Trust Agreement under which UMB
Bank, n.a., 10th and Grand, P.O. Box 419692, Kansas City, MO
64141-6692, has been appointed as Trustee under the Plan. Under the
terms of the Trustee Agreement, UMB Bank, n.a., holds and invests all
assets of the Plan, subject to the direction of each of the
participants of the Plan regarding the investment fund or funds to
receive contributions.
(b) The custodian's compensation is paid by the Corporation.
(c) No bond was furnished or is required to be furnished by the Trustee.
Item 7. Reports to Participating Employees
Each participant receives a quarterly statement showing the amounts contributed
by him/her to each of the funds during the calendar quarter and the market
values of investments as of the end of each quarter. The statement also shows
the Corporation's matching contributions allocated to the participant through
the Employees Stock Ownership Plan, which are invested in VF Corporation Series
B Preferred Stock (ESOP Preferred Stock), and the fair values based on the
preferred stock's stated redemption price of $30.875 per share or 80% of the
market value of the Corporation's Common Stock, whichever is greater.
2
<PAGE> 3
Item 8. Investment of Funds
Each participant by calling the VF Savings Line directs the Plan Administrator
to notify the Trustee to invest his/her own contributions in one or more of the
following funds:
- Money Market Fund
- Fixed Income Fund
- Balanced Fund
- Equity Growth & Income Fund
- Equity Growth Fund
- Foreign Fund
- VF Corporation Common Stock Fund (investing in common stock of the
Corporation)
Brokerage commissions of $3,878, $8,909, and $6,859 for the years ended December
31, 1996, 1995 and 1994 were paid by the Trustee to acquire the Corporation's
common stock for the Plan.
The Corporation's matching contributions go solely to the ESOP. These
contributions are allocated to participants who receive full value in the form
of ESOP Preferred Stock and are used by the ESOP to pay principal and debt
service on a loan from the Corporation.
Item 9. Financial Statements and Exhibits
<TABLE>
<S> <C> <C>
(a) Financial Statements Page No.
Report of Independent Accountants 5
Statements of Net Assets Available for Benefits -
December 31, 1996 and 1995
- Combined Plan 6
- Money Market Fund and Fixed Income Fund 7
- Balanced Fund and Equity Growth & Income Fund 8
- Equity Growth Fund and Foreign Fund 9
- VF Corporation Common Stock Fund and 10
Employee Stock Ownership Plan
- Loan Fund 11
Statements of Changes in Net Assets Available for Benefits -
For the Years Ended December 31, 1996, 1995 and 1994
- Combined Plan 12
- Money Market Fund 13
- Fixed Income Fund 14
- Balanced Fund 15
- Equity Growth & Income Fund 16
- Equity Growth Fund 17
- Foreign Fund 18
- VF Corporation Common Stock Fund 19
- Employee Stock Ownership Plan 20
- Loan Fund 21
Notes to Financial Statements 22
</TABLE>
Schedules:
Schedules I, II and III have been omitted because the
required information is included in the financial statements
and the related notes.
(b) Exhibits - none
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the VF Corporation Pension Plan Committee has duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
VF Corporation Tax-Advantaged Savings Plan
for Salaried Employees
-------------------------------------------
By: /s/ Louis J. Fecile
----------------------------------------
Louis J. Fecile
Vice President - Employee Benefits
Date: March 21, 1997
4
<PAGE> 5
Report of Independent Accountants
VF Corporation Pension Plan Committee
VF Corporation Tax-Advantaged Savings Plan
for Salaried Employees
We have audited the accompanying statements of net assets available for
benefits of the VF Corporation Tax-Advantaged Savings Plan for Salaried
Employees as of December 31, 1996 and December 31, 1995, and the related
statements of changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of the VF Corporation
Tax-Advantaged Savings Plan for Salaried Employees for the year ended December
31, 1994 were audited by other auditors whose report dated March 10, 1995
expressed an unqualified opinion on these statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the VF
Corporation Tax-Advantaged Savings Plan for Salaried Employees at December 31,
1996 and December 31, 1995, and the changes in its net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statements
of net assets available for benefits and in the statements of changes in net
assets available for benefits is presented for purposes of additional analysis
rather than to present the net assets available for benefits and changes in net
assets available for benefits of each fund. The fund information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
March 10, 1997
5
<PAGE> 6
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
COMBINED PLAN
<TABLE>
<CAPTION>
December 31
-----------------------------------
ASSETS 1996 1995
----- ----
<S> <C> <C>
Investments, at fair value
VF Corporation Common Stock -
326,618 shares in 1996
340,506 shares in 1995 $ 22,046,715 $ 17,961,692
VF Corporation ESOP Preferred Stock -
1,881,515 shares in 1996
1,964,942 shares in 1995 101,601,810 82,920,550
United States government obligations 16,991,039 17,329,048
Other securities 90,076,616 73,881,463
------------ ------------
Total investments 230,716,180 192,092,753
Dividends and interest receivable 312,017 338,457
Loans receivable from participants 9,374,718 8,705,631
------------ ------------
TOTAL ASSETS 240,402,915 201,136,841
------------ ------------
LIABILITIES
Employee Stock Ownership
Plan obligation - payable to VF Corporation 41,563,481 46,650,286
------------ ------------
TOTAL LIABILITIES 41,563,481 46,650,286
------------ ------------
Net assets available for benefits $198,839,434 $154,486,555
============ ============
</TABLE>
See notes to financial statements.
6
<PAGE> 7
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
MONEY MARKET FUND AND FIXED INCOME FUND
<TABLE>
<CAPTION>
Money Market Fund Fixed Income Fund
December 31 December 31
-------------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value
United States government obligations $ 0 $ 0 $16,991,039 $17,329,048
Other securities 6,629,950 6,187,337 2,250,229 1,175,779
---------- ---------- ----------- -----------
Total investments 6,629,950 6,187,337 19,241,268 18,504,827
Dividends and interest receivable 180 31,938 307,497 302,060
Loans receivable from participants 0 1,423,668 0 1,630,963
---------- ---------- ----------- -----------
Net assets available for benefits $6,630,130 $7,642,943 $19,548,765 $20,437,850
========== ========== =========== ===========
</TABLE>
See notes to financial statements.
7
<PAGE> 8
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
BALANCED FUND AND EQUITY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Balanced Fund Equity Growth & Income Fund
December 31 December 31
--------------------------------- ----------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS
- ------
Investments, at fair value
Other securities $7,045,986 $3,932,420 $44,337,501 $34,980,125
---------- ---------- ----------- -----------
Total investments 7,045,986 3,932,420 44,337,501 34,980,125
Dividends and interest receivable 181 30 378 223
Loans receivable from participants 0 53,297 0 2,457,411
---------- ---------- ----------- -----------
Net assets available for benefits $7,046,167 $3,985,747 $44,337,879 $37,437,759
========== ========== =========== ===========
</TABLE>
See notes to financial statements.
8
<PAGE> 9
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
EQUITY GROWTH FUND & FOREIGN FUND
<TABLE>
<CAPTION>
Equity Growth Fund Foreign Fund
December 31 December 31
---------------------------------- -------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value
Other securities $24,163,579 $24,727,939 $5,329,365 $2,370,207
----------- ----------- ---------- ----------
Total investments 24,163,579 24,727,939 5,329,365 2,370,207
Dividends and interest receivable 382 321 124 12
Loans receivable from participants 0 994,276 0 (34,572)
----------- ----------- ---------- ----------
Net assets available for benefits $24,163,961 $25,722,536 $5,329,489 $2,335,647
=========== =========== ========== ==========
</TABLE>
See notes to financial statements.
9
<PAGE> 10
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
VF CORPORATION COMMON STOCK FUND AND EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
VF Corporation Common Stock Fund Employee Stock Ownership Plan
December 31 December 31
-------------------------------- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value
VF Corporation Common Stock
326,616 shares in 1996
340,506 shares in 1995 $22,046,715 $17,961,692 $ 0 $ 0
VF Corporation ESOP
Preferred Stock
1,881,515 shares in 1996
1,964,942 shares in 1995 0 0 101,601,810 82,920,550
Other securities 240,255 315,239 79,751 192,417
----------- ----------- ------------ -----------
Total investments 22,286,970 18,276,931 101,681,561 83,112,967
Dividends and interest receivable 454 514 2,821 3,359
Loans receivable from participants 0 2,180,588 0 0
----------- ----------- ------------ -----------
TOTAL ASSETS 22,287,424 20,458,033 101,684,382 83,116,326
----------- ----------- ------------ -----------
LIABILITIES
Employee Stock Ownership
Plan obligation - payable to VF Corporation 0 0 41,563,481 46,650,286
----------- ----------- ------------ -----------
TOTAL LIABILITIES 0 0 41,563,481 46,650,286
----------- ----------- ------------ -----------
Net assets available for benefits $22,287,424 $20,458,033 $60,120,901 $36,466,040
=========== =========== ============ ===========
</TABLE>
See notes to financial statements.
10
<PAGE> 11
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
LOAN FUND
<TABLE>
<CAPTION>
Loan Fund
December 31
-----------
1996
----
<S> <C>
ASSETS
Investments, at fair value
Other securities $ 0
----------
Total investments 0
Dividends and interest receivable 0
Loans receivable from participants 9,374,718
----------
Net assets available for benefits $9,374,718
==========
</TABLE>
See notes to financial statements.
11
<PAGE> 12
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
COMBINED PLAN
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Dividends on VF Corporation Common Stock $ 469,018 $ 538,867 $497,205
Dividends on ESOP Preferred Stock 3,971,574 4,131,256 4,228,632
Interest 1,234,816 1,255,562 979,143
Income from mutual funds and
bank common trust funds 4,639,609 3,693,225 2,614,714
----------- ----------- ----------
10,315,017 9,618,910 8,319,694
----------- ----------- ----------
Contributions
Interest on loan repayments 637,885 548,512 402,626
Participants 14,670,636 14,883,216 15,290,975
VF Corporation 5,527,985 5,762,864 5,570,215
----------- ----------- ----------
20,836,506 21,194,592 21,263,816
----------- ----------- ----------
Withdrawals (16,191,145) (6,901,351) (8,128,767)
Forfeitures that reduce
VF Corporation contributions (301,873) (255,310) (118,128)
Interest paid to VF Corporation on Employee
Stock Ownership Plan obligation (4,386,805) (4,878,310) (5,344,502)
Expenses 0 (53,764) 0
Net realized and unrealized appreciation
in fair value of investments 34,081,179 20,147,532 2,951,585
----------- ----------- ----------
Net increase 44,352,879 38,872,299 18,943,698
Net assets available for benefits
at beginning of year 154,486,555 115,614,256 96,670,558
----------- ----------- ----------
Net assets available for benefits
at end of year $198,839,434 $154,486,555 $115,614,256
============ ============ ============
</TABLE>
See notes to financial statements.
12
<PAGE> 13
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
MONEY MARKET FUND
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
Investment income
Income from mutual funds and
bank common trust funds $ 313,675 $ 338,605 $ 204,216
----------- ----------- ----------
313,675 338,605 204,216
----------- ----------- ----------
Contributions
Interest on loan repayments 0 49,368 34,933
Participants 1,537,425 1,146,077 1,024,192
----------- ----------- ----------
1,537,425 1,195,445 1,059,125
----------- ----------- ----------
Withdrawals (991,225) (373,362) (434,310)
Forfeitures that reduce
VF Corporation contributions (9) (579) (435)
Fund transfers, net (449,011) (396,856) (311,109)
----------- ----------- ----------
Net increase 410,855 763,253 517,487
Net assets available for benefits
Beginning of year, as reported 7,642,943 6,879,690 6,362,203
Reclassify loan balances to separate fund (1,423,668) 0 0
----------- ----------- ----------
Beginning of year, as adjusted 6,219,275 6,879,690 6,362,203
----------- ----------- ----------
End of year $6,630,130 $ 7,642,943 $6,879,690
=========== =========== ==========
</TABLE>
See notes to financial statements.
13
<PAGE> 14
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
FIXED INCOME FUND
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Interest $1,234,816 $ 1,255,562 $979,143
Income from mutual funds and
bank common trust funds 42,437 41,620 38,440
----------- ----------- ----------
1,277,253 1,297,182 1,017,583
----------- ----------- ----------
Contributions
Interest on loan repayments 0 96,211 59,901
Participants 2,109,713 2,700,460 2,598,897
----------- ----------- ----------
2,109,713 2,796,671 2,658,798
----------- ----------- ----------
Withdrawals (2,565,214) (1,402,288) (1,771,571)
Forfeitures that reduce
VF Corporation contributions (11) (706) (890)
Net realized and unrealized appreciation
(depreciation) in fair value of investments (109,871) 191,476 (123,376)
Fund transfers, net 30,008 (571,686) (13,095)
----------- ----------- ----------
Net increase 741,878 2,310,649 1,767,449
Net assets available for benefits
Beginning of year, as reported 20,437,850 18,127,201 16,359,752
Reclassify loan balances to separate fund (1,630,963) 0 0
----------- ----------- ----------
Beginning of year, as adjusted 18,806,887 18,127,201 16,359,752
----------- ----------- ----------
End of year $19,548,765 $ 20,437,850 $18,127,201
=========== ============ ===========
</TABLE>
See notes to financial statements.
14
<PAGE> 15
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
BALANCED FUND
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------
1996 1995
---- ----
<S> <C> <C>
Investment income
Income from mutual funds and
bank common trust funds $ 721,016 $ 141,331
---------- -----------
721,016 141,331
---------- -----------
Contributions
Interest on loan repayments 0 7,685
Participants 703,667 226,246
---------- -----------
703,667 233,931
---------- -----------
Withdrawals (317,576) (40,993)
Forfeitures that reduce
VF Corporation contributions (238) 0
Net realized and unrealized appreciation
in fair value of investments 70,842 90,964
Fund transfers, net 1,936,006 3,560,514
---------- -----------
Net increase 3,113,717 3,985,747
Net assets available for benefits
Beginning of year, as reported 3,985,747 0
Reclassify loan balances to separate fund (53,297) 0
---------- -----------
Beginning of year, as adjusted 3,932,450 0
---------- -----------
End of year $7,046,167 $ 3,985,747
========== ===========
</TABLE>
See notes to financial statements.
15
<PAGE> 16
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
EQUITY GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Income from mutual funds and
bank common trust funds $2,148,023 $ 1,688,047 1,833,144
----------- ----------- -----------
2,148,023 1,688,047 1,833,144
----------- ----------- -----------
Contributions
Interest on loan repayments 0 154,780 123,536
Participants 4,131,053 4,215,860 4,624,489
----------- ----------- -----------
4,131,053 4,370,640 4,748,025
----------- ----------- -----------
Withdrawals (3,484,495) (1,378,118) (2,031,249)
Forfeitures that reduce
VF Corporation contributions (391) (1,272) (1,164)
Net realized and unrealized appreciation
(depreciation) in fair value of investments 5,037,526 7,296,660 (1,267,002)
Fund transfers, net 1,525,815 (1,485,754) (25,479)
----------- ----------- -----------
Net increase 9,357,531 10,490,203 3,256,275
Net assets available for benefits
Beginning of year, as reported 37,437,759 26,947,556 23,691,281
Reclassify loan balances to separate fund (2,457,411) 0 0
----------- ----------- -----------
Beginning of year, as adjusted 34,980,348 26,947,556 23,691,281
----------- ----------- -----------
End of year $44,337,879 $37,437,759 $26,947,556
=========== =========== ===========
</TABLE>
See notes to financial statements.
16
<PAGE> 17
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
EQUITY GROWTH FUND
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Income from mutual funds and
bank common trust funds $ 1,130,443 $ 1,353,455 $515,020
----------- ----------- -----------
1,130,443 1,353,455 515,020
----------- ----------- -----------
Contributions
Interest on loan repayments 0 100,380 81,580
Participants 3,389,402 3,329,947 3,834,443
----------- ----------- -----------
3,389,402 3,430,327 3,916,023
----------- ----------- -----------
Withdrawals (2,420,165) (1,087,899) (1,129,617)
Forfeitures that reduce
VF Corporation contributions (236) (1,444) (118)
Net realized and unrealized appreciation
(depreciation) in fair value of investments 1,604,220 4,253,881 (726,720)
Fund transfers, net (4,267,963) 1,794,722 2,439,546
----------- ----------- -----------
Net increase (decrease) (564,299) 9,743,042 5,014,134
Net assets available for benefits
Beginning of year, as reported 25,722,536 15,979,494 10,965,360
Reclassify loan balances to separate fund (994,276) 0 0
----------- ----------- -----------
Beginning of year, as adjusted 24,728,260 15,979,494 10,965,360
----------- ----------- -----------
End of year $24,163,961 $25,722,536 $15,979,494
=========== =========== ===========
</TABLE>
See notes to financial statements.
17
<PAGE> 18
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
FOREIGN FUND
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1996 1995
---- ----
<S> <C> <C>
Investment income
Income from mutual funds and
bank common trust funds $ 257,147 $ 98,277
---------- ----------
257,147 98,277
---------- ----------
Contributions
Interest on loan repayments 0 5,537
Participants 504,049 165,453
---------- ----------
504,049 170,990
---------- ----------
Withdrawals (217,661) (9,708)
Forfeitures that reduce
VF Corporation contributions (234) 0
Net realized and unrealized appreciation
(depreciation) in fair value of investments 428,766 (122,155)
Fund transfers, net 1,987,203 2,198,243
---------- ----------
Net increase 2,959,270 2,335,647
Net assets available for benefits
Beginning of year, as reported 2,335,647 0
Reclassify loan balances to separate fund 34,572 0
---------- ----------
Beginning of year, as adjusted 2,370,219 0
---------- ----------
End of year $5,329,489 $2,335,647
========== ==========
</TABLE>
See notes to financial statements.
18
<PAGE> 19
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
VF CORPORATION COMMON STOCK FUND
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Dividends on VF Corporation
Common Stock $ 469,018 $ 538,867 $ 497,205
Income from mutual funds and
bank common trust funds 5,963 6,622 4,284
----------- ----------- -----------
474,981 545,489 501,489
----------- ----------- -----------
Contributions
Interest on loan repayments 0 134,551 102,676
Participants 2,295,327 3,099,173 3,208,954
----------- ----------- -----------
2,295,327 3,233,724 3,311,630
----------- ----------- -----------
Withdrawals (1,888,739) (1,137,459) (1,310,494)
Forfeitures that reduce
VF Corporation contributions (143) (802) (841)
Net realized and unrealized appreciation
in fair value of investments 4,701,766 1,635,363 985,506
Fund transfers, net (1,573,213) (5,099,183) (2,089,863)
----------- ----------- -----------
Net increase (decrease) 4,009,979 (822,868) 1,397,427
Net assets available for benefits
Beginning of year, as reported 20,458,033 21,280,901 19,883,474
Reclassify loan balances to separate fund (2,180,588)
----------- ----------- -----------
Beginning of year, as adjusted 18,277,445 21,280,901 19,883,474
----------- ----------- -----------
End of year $22,287,424 $20,458,033 $21,280,901
=========== =========== ===========
</TABLE>
See notes to financial statements.
19
<PAGE> 20
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Investment income
Dividends on ESOP Preferred Stock $ 3,971,574 $ 4,131,256 $ 4,228,632
Income from mutual funds and
bank common trust funds 20,905 25,268 19,610
----------- ----------- -----------
3,992,479 4,156,524 4,248,242
----------- ----------- -----------
Contributions
VF Corporation 5,527,985 5,762,864 5,570,215
----------- ----------- -----------
5,527,985 5,762,864 5,570,215
----------- ----------- -----------
Withdrawals (3,526,117) (1,471,524) (1,451,526)
Forfeitures that reduce
VF Corporation contributions (300,611) (250,507) (114,680)
Expenses 0 (53,764) 0
Interest paid to VF Corporation on Employee Stock
Ownership Plan Obligation (4,386,805) (4,878,310) (5,344,502)
Net realized and unrealized appreciation
in fair value of investments 22,347,930 6,801,343 4,083,177
----------- ----------- -----------
Net increase 23,654,861 10,066,626 6,990,926
Net assets available for benefits
Beginning of year 36,466,040 26,399,414 19,408,488
----------- ----------- -----------
End of year $60,120,901 $36,466,040 $26,399,414
=========== =========== ===========
</TABLE>
See notes to financial statements.
20
<PAGE> 21
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (CONTINUED)
LOAN FUND
<TABLE>
<CAPTION>
Year Ended December 31
1996
----------------------
<S> <C>
Contributions
Interest on loan repayments $ 637,885
-----------
637,885
-----------
Withdrawals (779,953)
Forfeitures that reduce
VF Corporation contributions 0
Expenses 0
Net realized and unrealized appreciation
in fair value of investments 0
Fund transfers, net 811,155
-----------
Net increase 669,087
-----------
Net assets available for benefits
beginning of year, as reported 0
Reclassify loan balances to separate fund 8,705,631
-----------
Beginning of year, as adjusted 8,705,631
-----------
End of year $9,374,718
==========
</TABLE>
See notes to financial statements.
21
<PAGE> 22
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
NOTE A -- DESCRIPTION OF THE PLAN
VF Corporation (the Corporation) sponsors the VF Corporation Tax-Advantaged
Savings Plan for Salaried Employees (the Plan), which is a cash or deferred
plan under Section 401(k) of the Internal Revenue Code. Under the Plan,
certain salaried employees of specified subsidiaries, having at least one year
of credited service, may elect to contribute between 2% and 10% of their
compensation to the Plan. The Corporation matches employee contributions by
50% for up to 6% of compensation contributed by the employee. Employees remain
fully vested in their contributions to the Plan. The Corporation's matching
contributions are vested monthly on a pro rata basis, with full vesting after
five years of service or upon normal or late retirement, disability or death.
The Plan includes an Employee Stock Ownership Plan (ESOP). In 1990, the ESOP
purchased 2,105,263 shares of VF Corporation 6.75% Series B ESOP Convertible
Preferred Stock (ESOP Preferred Stock) for $65.0 million. Each share of ESOP
Preferred Stock, which has a redemption value of $30.88 plus cumulative accrued
dividends, is convertible into eight-tenths share of VF Corporation Common
Stock and is entitled to one vote. The trustee for the ESOP may convert the
ESOP Preferred Stock to Common Stock at any time or may cause the Corporation
to redeem the ESOP Preferred Stock under certain circumstances. The ESOP
Preferred Stock also has preference in liquidation over all other stock issues.
The Corporation's matching contributions, all of which go into the ESOP, are
allocated to employees in shares of ESOP Preferred Stock. Of the shares of
ESOP Preferred Stock owned by the ESOP, 854,856 shares in 1996 and 765,568
shares in 1995 have been allocated to employees.
The ESOP's purchase of the ESOP Preferred Stock was funded by a loan of $65.0
million from the Corporation that bears interest at 9.8%. The loan will be
repaid in increasing installments through 2003 from future minimum Corporation
matching contributions to the ESOP and dividends on the ESOP Preferred Stock.
The Corporation's minimum required matching contributions and dividends are
$8.7 million in 1997 and increases each year to $9.6 million over the following
four years.
Employee contributions are invested at the direction of the employee in one or
more of the funds administered by the Plan's trustee. The investment programs
of the Plan are as follows:
(a) Money Market Fund: Monies are invested in a money
market fund.
(b) Fixed Income Fund: Monies are invested in investments
that provide a fixed rate of return.
(c) Balanced Fund: Monies are invested in investments to obtain
as much income as possible, consistent with the preservation
and conservation of capital.
(d) Equity Growth & Income Fund: Monies are invested in
investments that are currently paying dividends and/or offer
prospects for growth of capital and future income, with
emphasis on capital appreciation.
(e) Equity Growth Fund: Monies are primarily invested in
common stock, securities convertible into common stock and
debt securities, with emphasis on long-term growth
opportunities.
(f) Foreign Fund: Monies are invested in stocks and debt
obligations of companies and governments outside the United
States.
22
<PAGE> 23
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE A -- DESCRIPTION OF THE PLAN (Continued)
(g) VF Corporation Common Stock Fund: Monies are invested in
Common Stock of the Corporation purchased on the open market
at prevailing prices on the New York Stock Exchange on the
date of purchase. Employees can direct no more than 50% of
their contributions to the VF Corporation Common Stock Fund.
Individual accounts are maintained for each participant; each account includes
the individual's contributions, Corporation matching contributions and
investment funds' earnings. Accounts may become payable upon retirement,
disability, death or termination of employment. Participants may also withdraw
all or a portion of their accounts by filing a written request that
demonstrates financial hardship. Participants may elect to receive
distributions in a lump sum or in an annuity, or accounts may be rolled over
into another IRS-approved tax deferral vehicle. Forfeitures are used to reduce
VF Corporation's obligation to pay plan expenses.
Participants may borrow from their individual account. Participants are
charged interest at the Morgan Guaranty "Published" prime rate at the time of
the loan and repay the principal within 60 months, or 120 months if the loan is
for the purchase of their primary residence. Participants may borrow up to
100% of their account balance in the Money Market Fund and 75% of their account
balance of remaining funds, not to exceed 50% of the participant's total vested
account balance, but may not borrow from the Corporation matching portion.
Payment in full is required at termination of employment. There were 1,772
loans outstanding at December 31, 1996.
Although it has no intent to do so, the Corporation may terminate the Plan in
whole or in part at any time. In the event of termination, participants become
fully vested in their accounts.
The number of participants in each fund was as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Money Market Fund 2,862 2,805 2,818
Fixed Income Fund 3,731 4,308 4,382
Balanced Fund 1,393 1,035 0
Equity Growth & Income Fund 5,420 5,725 5,603
Equity Growth Fund 4,040 4,513 3,999
Foreign Fund 1,032 700 0
VF Corporation Common Stock Fund 4,146 4,553 4,839
Employee Stock Ownership Plan 7,077 7,461 7,317
</TABLE>
The total number of participants in the Plan was less than the sum of
participants shown above because many were participating in more than one fund.
23
<PAGE> 24
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE B -- SIGNIFICANT ACCOUNT POLICIES
Investments are stated at fair value. Securities traded on a national
securities exchange are valued at the last reported sales price on the last
business day of the plan year. The ESOP Preferred Stock is stated at fair
value, based on the greater of 80% of the fair value of the Corporation's
Common Stock or the preferred stock's stated redemption price of $30.875 per
share. For commercial notes and United States government obligations, the Plan
trustee has established a fair value based on yields currently available on
comparable instruments. The fair value of the participation units owned by the
Plan in mutual funds and bank common trust funds is based on quoted redemption
values on the last business day of the plan year.
The plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments, which
consists of the realized gains or losses and unrealized appreciation or
depreciation on those investments.
Administrative expenses consisting primarily of fees for legal, accounting and
other services are paid by the corporation in accordance with the Plan
Agreement and are based on customary and reasonable rates for such services.
Payment of Benefits: Benefits are recorded when paid.
Use of Estimates: In preparing financial statements in accordance with
generally accepted accounting principles, management makes estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimates.
NOTE C -- INCOME TAX STATUS
The Internal Revenue Service has issued a favorable Determination Letter dated
January 16, 1996 stating that the Plan qualifies under the appropriate sections
of the Internal Revenue Code (IRC) and is, therefore, not subject to tax under
present income tax law. Once qualified, the Plan is required to operate in
conformity with the IRC to maintain its qualification. The Pension Plan
Committee is not aware of any action or series of events that have occurred
that might adversely affect the Plan's qualified status.
24
<PAGE> 25
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE D -- INVESTMENTS
Net unrealized appreciation (depreciation) in fair value of investments
included in Plan equity includes the following:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation (Depreciation) in Fair Value
Fair Value for the Year Ended December 31 at December 31
----------------------------------------------- --------------------------------------------
1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fair value as determined by
quoted market or stated
redemption price:
VF Corporation Common Stock $ 4,168,463 $ 52,620 $ 215,007 $ 22,046,715 $ 17,961,692 $ 19,295,129
ESOP Preferred Stock 22,201,877 6,484,308 3,812,036 101,601,810 82,920,550 78,361,197
Mutual funds and
bank common trust funds 6,121,697 11,083,328 (2,153,697) 86,921,008 71,875,357 46,457,343
----------- ----------- ----------- ------------ ------------ ------------
32,492,037 17,620,256 1,873,346 210,569,533 172,757,599 144,113,669
Fair value as determined by
Plan trustee:
United States government
obligations 0 0 0 16,991,039 17,329,048 15,767,773
Commercial notes (109,067) 191,467 (146,268) 812,427 678,070 249,552
Mutual funds and
bank common trust funds 0 0 0 2,343,181 1,328,036 1,580,383
----------- ----------- ----------- ------------ ------------ ------------
(109,067) 191,467 (146,268) 20,146,647 19,335,154 17,597,708
----------- ----------- ----------- ------------ ------------ ------------
$32,382,970 $17,811,723 $ 1,727,078 $230,716,180 $192,092,753 $161,711,377
=========== =========== =========== ============ ============ ============
</TABLE>
Unrealized appreciation in fair value of investments at December 31,
1996, 1995 and 1994 was $70,620,796, $39,182,641 and $21,770,129,
respectively.
25
<PAGE> 26
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE D -- INVESTMENTS (CONTINUED)
Net unrealized appreciation (depreciation) in fair value of investments
includes the following:
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------
1996 1995 1994
----------- ------------ -----------
<S> <C> <C> <C>
Aggregate proceeds $62,417,960 $57,592,059 49,419,023
Aggregate cost 60,719,750 55,256,250 48,194,516
----------- ----------- ----------
Net realized gain $ 1,698,210 $ 2,335,809 $1,224,507
=========== =========== ==========
</TABLE>
Of the net realized gain, $679,356, $1,690,513 and $1,041,640 related to gains
recognized on the sale of VF Common Stock and the redemption of VF Preferred
Stock for the years ended 1996, 1995 and 1994, respectively.
The fair value of individual investments that represent 5% or more of the
Plan's net assets at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ESOP Preferred Stock $101,601,810 $82,920,550
Fidelity Growth & Income Fund 44,076,501 34,838,023
Fidelity Magellan Fund 23,976,308 24,637,151
VF Corporation Common Stock 22,046,715 17,961,692
</TABLE>
26
<PAGE> 27
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTE TO FINANCIAL STATEMENTS (Continued)
NOTE D -- INVESTMENTS (Continued)
Investment held at December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF ISSUER AND TITLE OF ISSUE OR PRINCIPAL AMOUNT FAIR VALUE COST
- --------------------------------- ------------------- ---------- ----
<S> <C> <C> <C>
Securities of participating employer:
VF Corporation Common Stock 326,618 $ 22,046,715 12,356,875
VF Corporation 6.75% Series B ESOP
Convertible Preferred Stock 1,881,515 101,601,810 58,091,776
------------ ------------
123,648,525 70,448,651
------------ ------------
United States Government Obligations:
Small Business Administration Loans:
(Rates of 5.20% to 8.83%,
maturities of 03/02/97 to 05/23/11) $15,907,048 15,543,917 15,555,391
N.O.A.A. loans (Rates of 7.975%, matures 01/02/97) $ 114,831 114,687 114,687
F.M.H.A. loans (Rates of 5.675% to 9.875%, of maturities
05/01/98 to 11/19/08) $ 1,340,258 1,332,435 1,332,435
------------ ------------
16,991,039 17,002,513
------------ ------------
Other Securities:
Mutual funds and bank common trust funds:
Kemper Money Market Fund 6,588,972 6,588,972 6,588,972
Fidelity Puritan Fund 404,454 6,972,787 6,813,359
Fidelity Growth & Income Fund 1,434,315 44,076,501 31,587,314
Fidelity Magellan Fund 297,288 23,976,308 19,500,582
Templeton Foreign Fund 512,205 5,306,439 4,997,831
UMB Bank Fund: Scout Prime - R 2,343,182 2,343,182 2,343,182
American Commercial Lines (Due 07/15/01) $ 183,000 184,386 184,386
Private Export Funding Corp. (Due 04/30/04) $ 187,500 189,618 183,486
Raytheon Co. (Due 01/10/97) $ 200,000 199,729 199,108
Smith Enron Cogeneration LP (Due 12/15/06) $ 246,000 238,694 246,000
------------ ------------
$230,716,180 $160,095,384
============ ============
</TABLE>
27
<PAGE> 28
VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE E -- RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to Form 5500:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net assets available for benefits per the
financial statements 198,839,434 154,486,555
Amounts allocated to withdrawing participants 709,083 2,881,962
------------ ------------
Net assets available for benefits per Form 5500 $198,130,351 $151,604,593
============ ============
</TABLE>
The following is a reconciliation of withdrawals paid to participants per the
financial statements to Form 5500:
<TABLE>
<CAPTION>
1996
----
<S> <C>
Withdrawals paid to participants and forfeitures
per the financial statements $16,493,018
Add amounts allocated to withdrawing participants at December 31, 1996 709,083
Less amounts allocated to withdrawing participants at December 31, 1995 (2,881,962)
-----------
Withdrawals paid to participants and forfeitures per Form 5500 $14,320,139
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500 as
withdrawal claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the 1996
Annual Report and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-04-1997
<PERIOD-END> JAN-04-1997
<CASH> 270,629
<SECURITIES> 0
<RECEIVABLES> 633,195
<ALLOWANCES> 40,253
<INVENTORY> 730,823
<CURRENT-ASSETS> 1,706,326
<PP&E> 1,543,351
<DEPRECIATION> 821,827
<TOTAL-ASSETS> 3,449,535
<CURRENT-LIABILITIES> 766,267
<BONDS> 519,058
26,394
0
<COMMON> 63,908
<OTHER-SE> 1,909,831
<TOTAL-LIABILITY-AND-EQUITY> 3,449,535
<SALES> 5,137,178
<TOTAL-REVENUES> 5,137,178
<CGS> 3,458,166
<TOTAL-COSTS> 3,458,166
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,793
<INCOME-PRETAX> 508,408
<INCOME-TAX> 208,884
<INCOME-CONTINUING> 299,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299,524
<EPS-PRIMARY> 4.64
<EPS-DILUTED> 4.54
</TABLE>
